The company has come up with decent results on the margins front, however, sales volumes were lower YoY due to cyclone & flood in the quarter coupled with raw material availability issues.
Performance is as per my expectations & my biggest concern ( whether the company will be able to sustain its higher OPM in the current scenario) has eased up a little.
With that being said, Small cap investing is not for weak hearts🙂 Price volatility is extremely hugh & one Quarter results can easily move yoru stock by 20-50% on either side. Thats why building your own conviction is the key for holding & getting the benefits of compounding in these businesses.
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Dhruv, I think you’re right about chemicals. It’s a make or break sector. As someone previously commented, the market will not give a higher PE as things stand. The debottlenecking helped capacity and margins but I don’t see long term speculative value.
So it’s basically an old school bet (not a new age bet, as I thought earlier), on earnings. What do you think?
I on the contrary believe that it was earlier a cheap valuation play but now given the aggression being shown by the young promoter, growth levers are pretty decent in this company which can play out well in the long run. But again, I am also building a thesis & getting more confidence every quarter.
What promoter action are you betting into? I saw basic capex in the books.
Please check their capacity expansions from FY19 onwards, the expansion has been really fast & met by equally good capacity utilization. Currently, they are venturing in other compounds as well which might be big going forward compared to the current scale. Company’s credit ratings reports have provided very good insights regarding the same
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