Sharing a few ideas for profit from Moneycontrol Pro, Anubhav Sahu of Moneycontrol.com spoke about a stock that he is tracking closely, Clean Science and Technology.
It is a recently listed company, had a good run at the IPO, and is now gaining a lot of interest because of superior return ratios and margins.
Clean Science and Technology is the largest manufacturer of select chemicals catering to the agro, pharma market. The company accounts for 55 percent of the global capacity of chemicals called MEHQ and derives about 48 percent of its revenues from the same.
Here, the company commands superior margins due to profit innovation; gross margins in this space are close to 70 percent versus 30 percent for its peers.
Another significant driver for the company is a strong export market, notable part of that is China, which is otherwise seen as the most competitive market, constituting more than one-third of its sales.
Having said that, valuation premium is high. We believe this can sustain due to better product spreads, clean balance sheet and emphasis on green chemistry. Capex intensity is aggressive and backed by internal accruals.
In our opinion, the sustainability seen will gradually pick up in the chemical space, with that context in mind, investors can accumulate this stock on dips.
Watch the accompanying video for more.