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MOSL: Morning India (30/August/21): 1. Clean Science and Technology (Novel chemistry at play); 2. Bharti Airtel; 3. India Strategy (Vaccination drive gathers momentum); 4. Automobiles

MOrning India (30/August/21): 1. Clean Science and Technology (Novel chemistry at play); 2. Bharti Airtel; 3. India Strategy (Vaccination drive gathers momentum); 4. Automobiles

 

Today’s top research idea

Clean Science and Technology - Initiating Coverage: Novel chemistry at play

• Clean Science and Technology (CSTL) has emerged as the global leader in most of its product categories. It has further bolstered its value chain through novel manufacturing technology based on green chemistry for one of the key raw materials.
• CSTL's streak is driven by its strong R&D capabilities - in both plant technological development as well as process innovation. This has led to the gross margin expanding to 76% in FY21 from 62% in FY16 (the EBITDA margin expanded from 33% to 50.5% over FY16-21).
• We expect CSTL's revenues to grow at a CAGR of ~23% over FY21-24 (on the back of capacity additions at Unit-III in phases over FY22). The company also plans to capture higher market share for its products. Its EBITDA margin is likely to remain robust at ~49%, with the gross margin at ~70% over FY21-24 - as the company continues to improve the yield of its products and processes.
• In view of its dominating product market share and ability to sustain the highest margins in the industry, we initiate coverage on CSTL with a Buy rating.

 

MOrning India (30/August/21): 1. Clean Science and Technology (Novel chemistry at play); 2. Bharti Airtel; 3. India Strategy (Vaccination drive gathers momentum); 4. Automobiles

 

 

Today’s top research idea

Clean Science and Technology - Initiating Coverage: Novel chemistry at play

• Clean Science and Technology (CSTL) has emerged as the global leader in most of its product categories. It has further bolstered its value chain through novel manufacturing technology based on green chemistry for one of the key raw materials.
• CSTL's streak is driven by its strong R&D capabilities - in both plant technological development as well as process innovation. This has led to the gross margin expanding to 76% in FY21 from 62% in FY16 (the EBITDA margin expanded from 33% to 50.5% over FY16-21).
• We expect CSTL's revenues to grow at a CAGR of ~23% over FY21-24 (on the back of capacity additions at Unit-III in phases over FY22). The company also plans to capture higher market share for its products. Its EBITDA margin is likely to remain robust at ~49%, with the gross margin at ~70% over FY21-24 - as the company continues to improve the yield of its products and processes.
• In view of its dominating product market share and ability to sustain the highest margins in the industry, we initiate coverage on CSTL with a Buy rating.