Active Stocks
Tue Apr 16 2024 15:59:30
  1. Tata Steel share price
  2. 160.05 -0.53%
  1. Infosys share price
  2. 1,414.75 -3.65%
  1. NTPC share price
  2. 359.40 -0.54%
  1. State Bank Of India share price
  2. 751.90 -0.65%
  1. HDFC Bank share price
  2. 1,509.40 0.97%
Business News/ Markets / Mark To Market/  Clean Science and Technology gets green signal from investors
BackBack

Clean Science and Technology gets green signal from investors

Clean Science is debt-free with a strong return ratio of 45%. Its cash conversion cycle is healthy at 45 days which helped in free cash flow accumulation of Rs28 crore over FY18-21

Clean Science and Technology saw robust listing gains on Monday. (Photo: Company website)Premium
Clean Science and Technology saw robust listing gains on Monday. (Photo: Company website)

Clean Science and Technology Ltd (CSTL) had a stellar stock exchange debut on Monday, with its shares listing at nearly double the issue price. Investor confidence has been strong for speciality chemical manufacturers, given firm demand and realisations.

The fact that CSTL is focused on developing green chemicals and is among the largest manufacturers of multiple green chemicals are added positives. Its strength lies in having developed clean-technology that uses non-toxic raw materials with lower effluents, leading to cost efficiencies as we. It uses the unique catalytic transformation (rare among Indian chemical companies) for production and is the only company globally to use vapour phase process for Anisole (used as a key raw material for all its other products), say analysts.

Demand for green chemicals is expected to grow at a 10.5% CAGR globally over CY2019-25, led by rising awareness of ill-effects of some traditional chemicals, as per a report by Motilal Oswal Financial Services Ltd. This is in turn will boost prospects of Clean Science's.

Moreover, the company’s financial performance has been impressive. It recorded a revenue growth of 14% CAGR over FY19-21, helped by strong volume growth across segments. Operating performance too has been strong, aided by technology and improving realisations. It has reported a consistent improvement in margins. Adjusted Ebitda margin was at 34.66%, 44.19% and 50.53%, respectively during FY19, FY20 and FY21. Return ratios have also been supportive and have seen regular improvement.

The company is debt-free with a strong return ratio of 45%. Its cash conversion cycle is healthy at 45 days which helped in free cash flow accumulation of Rs28 crore over FY18-21 (103% CAGR).

It has two manufacturing facilities in India with 11 production lines strategically located at Kurkumbh (Maharashtra), which is in close proximity to the JNPT port. This helps as CSTL is an export-focused company. Its had a combined installed capacity of 29,900 MTPA as of 31 March 2021.

Valuations nevertheless must be monitored. At the issue price of Rs900, CSTL was offered at a P/E of 48 times of FY21 earnings. On listing, the valuations have only stretched and the company will need to meet investor expectations on growth.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Ujjval Jauhari
Ujjval Jauhari is a deputy editor at Mint, with over a decade of experience in newspapers and digital news platforms. He is skilled in storytelling, reporting, analysing and writing about stocks, investment ideas, markets, corporates and more. He is based in New Delhi.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 19 Jul 2021, 11:28 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
Switch to the Mint app for fast and personalized news - Get App