As promised, here I am, with a brand new stock discussion. And for those of you looking at the Chemical sector in the hope of revival, here is one such business coming off my radar.
Before I begin, let me remind you about the disclaimer that this is purely a discussion, not a recommendation. Stocks are volatile by nature, exercise your judgment to invest in them. Use only surplus money as there are chances of permanent capital loss in the share market.
So let’s delve into the stock of this week called AMI Organics.
For those of you, who like, here is the Annual report, and for others’s let start the discussion in our specified format.
What does it do?
Products: API, Fine chemical, and Agrochemical.
Sales and Profit growth: Phenomenal (barring the last 12 months)
ROCE is fluctuating but still keeping above 20%.
Pledging: Zero!
Debt: 100crs, in line with the capex planned.
Dividend yield: 0.28%, in line with capital requirements.
What’s the trigger?
Apart from the phenomenal growth opportunity in the chemical sector, here are some other key triggers.
Quality of clients :
Good lists of clientele touching across various geographical boundaries.
Quality of product standard :
Capacity expansion :
Brownfield project at Ankleshwhar site with estimated capex of around 190 cr.New Avenues of Growth:
Electrolyte manufacturing for lithium-ion battery. (samples approved by customers)
Additional API manufacturing for an existing customer. (capacity expansion in progress)Good R&D facility, with 14 patents (4 granted, 10 under process).
Risk?
The obvious risk of investing in stocks is loss of capital with the economic downturn risk, which is not in our control. Let’s see a few others…
Since its IPO in Sep 2021, the stock has been going through stagnant performance.
There was a significant erosion in the margin of the company due to fluctuations in raw materials and competitive pricing in the overall chemical sector.
Since the export makes a major part of the company's revenue any geographical tension can lead to a serious decline in revenue materialization.
Hope you enjoyed the discussion, and will try to bring other stock in the coming weeks.
Till then, keep investing.