Hey insiderTrader,
Great analysis. Kothari has been on my watchlist for sometime now. I tried carrying out scuttlebutt also by asking some of my friends in the chemicals business about the company and they said it looked decent.
However, one question holds me back from investing big in the company: We know that Kothari Petrochemicals (KP) buys around 70% of their feedstock from Reliance and around 30% from CPCL. We also know that their customer concentration is relatively high, with their top 5 customers accounting for close to 50% of revenue. So KP seems to be a middleman prone to getting squeezed from both sides. I can’t comment on their customers, but we all know that Reliance is a hawk when it comes to business moves. Don’t you think that as soon as KP proves making PIB is an attractive business with great margins, Reliance can swoop in and either expand their own capabilities to make PIB, or start a competing company to KP to make PIB and stop sending raw material to KP?
That would put KP in a difficult spot correct?
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