Hello Sir,

Hope you are doing well.

2 days back, we released new stock recommendation for Alpha and Alpha + Members and would like to share with you details on the same.

It’s a Chemical company and we are considering it as medium-long term cyclical investment opportunity. The company has very good scope for improvement in profitability and due to the downcycle of the industry, the stock is available at very attractive valuations.

Here are some interesting details about the stock:

  • Chemical company
  • Strong growth – 8.5% volume CAGR and 19% sales CAGR in Chemicals division between FY 18-FY 23
  • Integrated operations with by-products being used for production of value added products
  • Expanded capacity by 28% in FY 24 and expanding further by 50% for 1 of the product lines
  • Balance sheet – One of the lowest absolute debt and debt equity ratio in the last 10 years
  • Scope for improvement in profit – Margins currently lower than average 14-16% EBITDA. With capacity expansion and if margins go back to 14-16%, strong probability of PAT more than doubling to 120-130 crore in 2-3 years
  • During really good times when realizations increase substantially, company’s PAT might even cross 250 crore +
  • Valuations – Trading at sub 1,000 crore market cap against average PAT of Rs 125 crore for the last 5 years. Due to current downcycle, stock is available at only 0.9 times book value

Overall, the company has done well in the past and currently due to the downcycle of the industry, the stock is available at very attractive valuations.

Further, as the company utilizes new capacity and the margins go back to normal 14-16% EBITDA, the profitability can improve substantially.

If you are medium-long term investor, you can get the new recommendation along with our other premium Alpha and Alpha + Members by signing up HERE.

 

Note: Learning and Investing should happen together. You get detailed reports with our recommendations so that you can learn how to select stocks and also understand the thought process behind stock selection.

(End)

 

Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

SEBI Research Analyst Registration No. INH100001690
Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Details of Associate: Not Applicable

Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer: http://www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to investors on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690. BSE Enlistment No. 5114.

Address – 7, Panch Ratan, 7/128, Swaroop Nagar, Kanpur – 208002, Contact No. – +91-7275050062

Compliance Officer – Mr. Ekansh Mittal, +91-9818866676, ekansh@katalystwealth.com

Grievance Redressal – Mittal Consulting, grievances@katalystwealth.com, +91-9818866676, +91-7275050062

“Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.

“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.”

The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.

The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.

We submit that no material disciplinary action has been taken on Ekansh Mittal by any regulatory authority impacting Equity Research Analysis.

Disclaimer: You can access it here – LINK

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No

Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No

Whether it or its associates have received any compensation from the subject company in the past twelve months – No

Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No

Whether the research analyst has served as an officer, director or employee of the subject company – No

Whether the research analyst or research entity has been engaged in market making activity for the subject company – No