Dynamic Levels, is bullish on the stock of Meghmani Organics, and has set a target price of Rs 50 on the stock. The shares are currently trading at Rs 40. Here are 8 reasons why the equity research firm has placed a buy call on the stock, which could be an upside of 25% from here.
Largest producer of color pigments
Meghmani Organics is one of the largest producers of color pigments in the world. It is also a renowned name in Agrochemical industry. Diversified in various products, the company has 400+ marquee clients in 75 countries.
Meghmani organics saw total revenue in the pigment segment increasing by 7 per cent year on year, driven by strong performance in domestic markets which grew 48 per cent.
The margins also improved with the EBITDA margin in this segment increasing by 14 per cent, year on year.
Strong growth in Agrochemicals
Meghmani Organics has shown a robust growth in Agrochemicals revenue, reporting a growth of 43 per cent driven by 76 per cent growth in domestic and 26 per cent growth in exports markets.
This is a healthy growth by any standards.
New production begins
The revenue from basic chemicals increased by 3 per cent (year on year) to reach Rs 956 million. Another positive is that production has begun at the new Caustic Potash plant.
Strong domestic growth business
The domestic business of the company increased by 25 per cent (year on year) and export revenue increased by 10 per cent, year on year.
Again, a healthy growth.
Low p/e ratio
Meghmani Organics is trading at a P/E ratio of 12.35 which is below its industry P/E.
This means the shares are undervalued.
The stock has given a movement of 150% from March 2016 and from there it has given a correction of around 20%.
This leave scope for appreciation for the shares of Meghmani Organics.
Long term rating revision
CRISIL has recently revised the Long-Term Rating of Meghmani Organics to A/Positive (outlook revised from stable and rating reaffirmed). The short term rating has been given A1 (reaffirmed).
Disclaimer: The contents of the article is sourced from the research report of Dynamic Levels with due permission. The research report is prepared by Arnab Dasgupta. Dynamic Levels is a website owned by Dynamic Equities Pvt Limited, a member of BSE and NSE. You can visit Dynamic Levels by clicking: Dynamic Levels The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and Dynamic Levels do not accept culpability for losses and/or damages arising based on information in this article.