Clean Science and Technology is a leading chemical manufacturing company. The company was incorporated in 2003, Clean Science and Technology Ltd is one of the leading chemical manufacturers globally. It manufactures speciality chemicals, pharmaceutical intermediaries, FMCG chemicals and functionally critical specialty chemicals such as Performance Chemicals (MEHQ, BHA, and AP), Pharmaceutical Intermediates (Guaiacol and DCC), and FMCG Chemicals (4-MAP and Anisole).

The company’s products are used in textiles, FMCG, pharmaceutical, and agricultural industries.

Setbacks

The share price of Clean Science & Technology has fallen by over 30% to Rs 1450, in the past 1-year from its lifetime high of Rs 2700. The stock has fallen down tremendously due to its high valuation. The shares are trading at a price-to-earnings (P/E) ratio of 52.3x, which is much higher than the industry average of 24.3x. The fall in net profit margin, despite the rise in revenue due to high input costs, has deteriorated the share price.

Enhancements

During the third quarter which ended in December 2022 quarter, the company’s net profit has enhanced by 44% YoY supported by easing input costs. The revenue has risen by 33% YoY. It is expected to rise further in the forthcoming quarters as the company has started manufacturing Hindered Amine Light Stabilizers (HALS), a performance chemical which India imports.

Considering the historical 5-year data, the company’s revenue has increased at a CAGR of 12%, supported by growth in demand. The net profit has risen at a CAGR of 18.5% for the same period.

India is the sixth largest chemical manufacturer in the world. With the government’s ‘Make in India’ initiative and the China trend, the speciality chemicals industry has the momentum for growth. Hence, this places a wonderful support for Clean Science and its future prospects appear brilliantly promising.

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