May 25, 2023
Good
- One of the most well communicating and transparent management.
- Growth focused Company – both organic and inorganic
- Crisil recently in February 2023 upgraded long term rating to AAA
- Good operational track record
- 10 yrs Sales CAGR of 13%. 3yr at 31%
- Profit CAGR of 17% and 23% respectively
- 10 yr ROE of 24%
- Stock price has generated 17% CAGR in last 10 yrs
Concerns
- Agri and subsidy dependence. This will always have seasonal and working capital concerns. Though the company’s good track record mitigates some of this risk. Besides, it also plans to increasingly diversify towards speciality chemicals, nutraceuticals, CDMO etc. However, this will only gradually evolve based on the available opportunities.
Stock has fallen back to it’s 2 yrs old levels. In short term there is a head and shoulder pattern and hence can be considered weak. Rs 850 is a strong support. If breaks, then can fall to Rs 750 levels.
Look to acquire in weakness.