Technical Analysis
Meghmani Organics Limited (MOL) share price looks strong in its technical chart with strong trading volume. The stock completed its correction and formed a double bottom at 110 level, starting moving up with strong volume. Meghmani Organics Limited’s share has strong support at 109 levels on the daily chart. Looking at the daily chart, the share closed above all its short-term moving averages (20 DMA and 50 DMA).
Meghmani Organics Limited stock is trading at 9.77 Price to Earning (PE) and available at a 2.03 price-to-book (PB) value while sector PE is 11.07 PE and 2.47 PB value. It is a good stock to accumulate in correction. The stock may reach its all-time high at 156 level very soon once it closes above the 126 level with strong volume. Meghmani Organics Limited was listed on the stock exchanges in Aug 2021 at 95 levels and closed at 90 levels on that day. Momentum indicator ADX is looking bullish on the daily chart. The counter recorded above 40 percent delivery over the last week. That reflects the demand for this stock.
Fundamental Analysis.
Meghmani Organics limited manufactures Pigments and Agrochemicals in India. The company works in two major segments in the chemical industry – Pigments and Agrochemicals. It has three Pigment manufacturing facilities at Vatva, Panoli, and Dahej SEZ in the state of Gujarat. About 75 percent of pigment revenues come from exports.
The company is a leading agrochemical Manufacturing Company having a presence in 75 countries across the world. The company has 6 multifunctional ISO-certified production facilities for agrochemicals. It manufactures a wide range of products and backward integration of key raw materials, located in Gujarat, India. Further, MOL is a highly backward integrated company for major raw materials. That helped the company to reduce dependency on outside sources for raw materials and stay competitive with consistent supplies. Moreover, the company have some subsidiaries – Meghmani Finechem Limited, Meghmani Europe BVBAPT, Meghmani Organics Indonesia, etc.- that helps it in reducing supply chain constraints.
Meghmani Organics Limited is the third Phthalocyanine Pigment Manufacturer Globally. The company has a strong brand presence in India with over 36 brands of various pesticide formulations. Meghmani Organics Limited is planning to have INR 7.5 billion Capex over the next 2-3 years. Constant Focus on backward integration resulting in better supply chain and cost control management. To summarize, the company can be a multi-bagger stock in the future.
Financial Analysis
The company recorded strong revenue growth. The total revenue has gone up to INR 2600 crore in FY2021-22 from INR 1667 crore in FY2020-21, and profit after tax has gone up to INR 304 crores from INR 186 crores during the same period. The stock EPS has gone up to 11.97 from 7.33 over the same period. In addition, the company is consistently paying dividends. EBDITA is also above the industry average in both AgroChem and Pigments. Further, the Net profit of Meghmani Organics rose 183.7% to INR 102.21 crore in the Q4-2022 as against INR 36.03 crore during the same period of 2021.
Meghmani Organics Limited is a small-cap company with ~INR 3066 crores with a face value of INR 1. Return on capital employed is ~24 percent while return on equity is ~22.6 percent. This data reflects a strong valuation of this counter. Promoters have increased holdings from 49.36 in Dec 2021 to 49.41 percent in Mar 2022. Additionally, DII has increased its holdings in the company from 0% in Dec 2021 to 0.4 % in March 2022. This shows the strength of the company. FII holdings remained the same at 1.25 percent during this period.
Meghmani Organics Limited Management
Headquartered in Ahmedabad, Gujrat, the company was founded in 1986 as a partnership firm. Mr. Jayanti Patel, together with Mr. Ashish Soparkar and Mr. Natwarlal Patel are the promoters of the company. Mr. Jayanti Patel is the Executive Chairman of the company. He holds a BE in chemicals with 47 years of experience. Mr. Ashish Soparkar is the Managing Director of the company. He holds a BE in chemicals with 46 years of experience. Mr. Natwarlal Patel is the managing director of the company. He holds an MSc degree with 45 years of experience. Hence, the company is in capable hands and expected to grow strong with a strong tailwind for the chemical sector in India.
