There is a lot of negative sentiment about the management’s guidance because one “major customer” who suddenly gave dwindling volumes.
Also, the fact that Novozymes is the undisputed leader. Coupled by the fact that when enzymes is a small fraction of the cost of making the product, why would anyone switch loyalties.
Both the above are fair arguments. Knowing the above, I have still went ahead and invested about 10% of my pf. Reasons:
Firstly, I love the fact that the promoters itself are the sceintists / technocrats. For this fact I give immense weightage, compared to “hired brains”, which might not stay long with the company.
Secondly, Enzymes are a natural catalyst, replacing chemicals. See the way the world is going, and one would realize this is the future!
Thirdly, they have multiple patents, a global player and no pricing pressure…an awesome combination!
But with all this, why arent they growing exponentially? Enzymes are now being commerciaIized in detergents, animal feed, nutraceuticals & health care…guess the whole enzyme market would need some time to penetrate into more products in a deeper way. Like how the palm oil enzyme is being developed by the company for 2018-19.
I wouldnt expect this to be a multibagger, but I have a lot of conviction that this would be a good compounder. Offcourse, management is not yet tested over time. Since they have increased stake this year, I would not be too worried on this count.
Disc: Invested.