I find Dharmaj to be quite an interesting risk reward opportunity, as its growing quite fast and there is a good scope of margin expansion in next 3-4 years as their technical division scales up (higher margin than formulations division). However, near term profitability might be negatively impacted by operational and depreciation costs of their new plant.
As explained above, I find Dharmaj to be a good growth opportunity trading at reasonable valuations. Just to highlight how well they are doing, even in a remarkably tough year they grew sales by 24% when UPL (the largest agchem co) reported 20% drop in sales and losses! Dharmaj and UPL are at different life cycles, its easier for Dharmaj to grow at 20%+ whereas if UPL does that, they will outgrow the market they are serving.
Please read the Kaveri thread posts during the 2011-14 timeframe and make your own judgement.
I made a few changes in the last few months and will share them once I get some time. Its been a busy few months.
Sure, we all have our own ways of looking at things which is what makes the markets very interesting. The forces of decreased realisations as AUM scales also applies to CAMS, its not limited to AMC cos.
Sorry, I dont have any meaningful insights on this.
I sold out of Mayur and used the proceeds to buy more of Stylam shares. I feel Mayur is facing a very tough time scaling up whereas Stylam seems to be benefitting from multiple growth drivers (higher exports, potential of domestic scaleup, etc.).
I agree, I also bought more PI earlier this year. At different points of time, investors have gotten fascinated with a host of specialty chemical cos and have driven their valuations to crazy levels. I remember people went nuts about “fluorine chemistry” or “electrolyte chemistry” or “waste to wealth” etc. When investors start teaching you chemistry, I want to run away!
PI is probably the only chemical cos which is actually differentiated, and have grown even during these tough times. And they are now foreying into the pharma business, which is a much bigger market, more moated if one cracks it, and gives higher margins. I like how management keeps expanding their TAM.
About allocations, during 2020, my allocations in PI went to 6-10% and I tapered it down in subsequent years due to very high valuations. With their valuations now cooling down, I feel quite bullish on PI and want to again scaleup the position.
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