Just like Tatva chintan, Clean science is another poster boy of a hot stock in a hot sector. Its IPO came precisely during chemical boom and at that time there were a lot of videos ennumerating the competitive advantages of the company. The main thing to observe here is that perceived competitive advantage of a company is of not much use if the sector itself is cyclical. In the heady days of chemical sector boom, a lot of learned people also forgot to take into account the cyclicality of the sector.
Even after a lot of correction in stock prices ( half levels to peak) and a lot of sideways movement, I find that current market cap of the company is nearly 14000 crores. Sales is less than 1000 crores as on date and net profit on an annual basis is less than 300 crores. Peak valuations were a PE of 138… And even after all this time, PE still remains above 40. At some point of time company needs to start delivering numbers, otherwise there can be downside from current levels too.
I have marked successively lower tops (bold solid red horizontal lines) and successive lower bottoms (marked in bold solid blue horizontal lines) on the charts… Typical lower top and lower bottom formation of a stock in a downtrend. Need to see when this cycle reverses.
