Fundamental Analysis – Clean Science & Technology Ltd.

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Introduction

Clean Science & Technology Ltd. (CSTL) is a leading manufacturer of specialty chemicals in India. The company has a strong track record of financial performance, with revenue and net profit growing at a CAGR of over 20% over the past five years.

In FY23, CSTL’s revenue was ₹889.84 crore, up 22.2% from the previous year. Net profit was ₹291.21 crore, up 23.4% from the previous year.

CSTL’s financial performance has been driven by a number of factors, including:

  • Strong demand for its products from a variety of industries, including pharmaceuticals, agrochemicals, and food and beverage.
  • Its focus on innovation and new product development.
  • Its efficient operations and cost management.

CSTL has a strong balance sheet with a debt-to-equity ratio of 0.14 as of March 31, 2023. The company also has a healthy cash flow position, with a free cash flow of ₹208.82 crore in FY23.

Revenue Breakdown

CSTL’s revenue is derived from a variety of products and industries, as shown in the following table:

Performance Chemicals | 48.2% | | FMCG Chemicals | 32.3% | | Pharma & Agro Intermediates | 19.5% |

Customer Base

CSTL’s customer base is diversified across a variety of industries, including pharmaceuticals, agrochemicals, food and beverage, textiles, and paints. The company’s major customers include leading multinationals and Indian companies.

Competitive Landscape

The Indian specialty chemicals market is highly competitive, with a number of domestic and international players. However, CSTL has a number of competitive advantages, including its strong product portfolio, focus on innovation, efficient operations, and cost management.

Investment Thesis

CSTL is a well-managed company with a strong track record of financial performance. The company is well-positioned to benefit from the growing demand for specialty chemicals in India and around the world. CSTL also has a strong balance sheet and a healthy cash flow position.

Investment Risks

CSTL is exposed to a number of risks, including:

  • Economic risk: A slowdown in the global economy could lead to lower demand for CSTL’s products.
  • Regulatory risk: The company is subject to a number of government regulations. Changes in regulations could have a negative impact on the company’s business.
  • Competition risk: The company faces competition from a number of domestic and international players. Increased competition could lead to lower margins and market share losses.

Detailed Financial Performance Analysis

CSTL’s revenue has grown at a CAGR of 21.2% over the past five years, from ₹471.71 crore in FY19 to ₹889.84 crore in FY23. Net profit has grown at a CAGR of 23.4% over the same period, from ₹141.75 crore in FY19 to ₹291.21 crore in FY23.

The company’s EBITDA margin has averaged over 25% over the past five years. CSTL’s strong EBITDA margin is due to its efficient operations and cost management.

CSTL has a strong balance sheet with a debt-to-equity ratio of 0.14 as of March 31, 2023. The company also has a healthy cash flow position, with a free cash flow of ₹208.82 crore in FY23.

The company’s financial performance is expected to remain strong in the coming years, driven by the growing demand for specialty chemicals in India and around the world.

Conclusion

CSTL is a well-managed company with a strong track record of financial performance. The company is well-positioned to benefit from the growing demand for specialty chemicals in India and around the world. However, investors should be aware of the risks associated with investing in CSTL, including economic risk, regulatory risk, and competition risk.

(Note: This analysis is for informational purposes only and should not be considered as financial advice. It is recommended to consult with a qualified financial advisor before making any investment decisions.)