Clean Science and Technology Limited (CSTL) - A clean and green future ahead

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Hello everyone.
I see there has not been any deep discussion for clean science on VP forum.

Let me start adding my view and then would like to connect with you all for a discussion.

Industry:

  • Industry has faced enough headwinds as of now - realization and demand has been the big concerns
  • From the latest concalls of many chemical companies, one thing is clear to me that volume has started growing
  • On the realization front, it is still not turning up, but management said they won’t go below this pricing for their products - hence that part also looks pretty much stable from here.

Clean Science:

  • The company enjoys one of the highest margins in the industry
  • The chemical company produce mostly goes to build up another products, hence big companies are their customers
  • Company is the only non-chinese player entering into many products - management said foreign customers don’t even know that Indian companies can make this kind of products

Don’t want to go so much into the business discussion, but this is the state of the company as per me:

  1. On the business front, volume growth is expected, with flat or improving realization going forward.

  2. Company’s flagship products are at 70-75% utilization, which is optimal, and hence incremental volume growth is expected from new products lines - HALS series, TBHQ and DCC, along with new Pharma capacity.

  3. Margins are more or less sustained, and won’t improve from here - supposed to be flat.

  4. Efficiency rations have degraded, mostly due to the lower demands - they should improve

With all these, the company would be very attractive if would have available at decent valuation - which is not the case.

To create wealth of investors from this valuation, the new products line must be killer and should generate very high revenue growth with high efficiency.

Views are welcomed, 9510274855 - Meet is my number for good discussion.

Thanks.

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Main concern for Clean science is Vinati’s entry into their bread & butter business of MEHQ, Guicol & other products.

Vinati looks very confident of launching it & had done huge capex for it. Not only that, they are going to produce it with same technology of clean science.

Definitely It will take time for Vinati to optimize production but this overhang will be there till clarity comes & in future this can definitely dent margin profile of Clean science.

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I need to get clearity on that, but till now Vinati was a customer to clean science for MEHQ, and now they are starting it.
Whether it will be consumed internally or they will be selling it is a question.

MEHQ is raw material for Vinati, they were buying it from Clean and now doing backward integration.
Whether it will be available for selling also it not much clear to me as of now.

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Chemical plants have optimal utilization level of 75-80%, hence according to that the revenue can be in range of 800 Crore, the same is mentioned by the management in latest concall

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