Meghmani Finechem Ltd. share is in Bullish Momentum – Stock on Move

MFL share price Technical Analysis:

MFL share price (Meghmani Finechem Ltd.) looks strong in its technical chart with a strong trading volume. The stock completed its correction and formed a double bottom at the 1194 level, starting moving up with strong volume. On the daily chart, the MFL share price closed above all its short-term moving averages (20 DMA and 50 DMA). The stock has been trading with strong volume for the last four days. Today, the trading volume closes above its long-term moving average. That signals a breakout in the stock from technical analysis.

MFL share price share price is trading at 20.8 Price to Earning (PE) and available at a 5.6 price-to-book (PB) value while sector PE is 11.3 PE and 2.5 PB value. The debt-to-equity ratio of the company is at 1.3 times in FY22. MFL share price seems a little expensive in comparison to its sector. However, it is a good stock to accumulate in correction. With the support of the broader market, MFL share price can reach the 1440 level in the short term. Once it closes above 1440 with strong volume, the stock may reach its all-time high at the 1580 level. MFL share price has strong support at 1194 and resistance at 1381 level.

Meghmani Finechem Ltd. was listed on the stock exchanges in Aug 2021 at 390 level and closed at 423 level on that day. Since then, the stock has given a return of 3 times its listing price. Momentum indicator ADX is looking bullish on the daily chart. MFL share price recorded above 40 percent delivery over the last week. That reflects the demand for this stock. 

Meghmani Finechem Ltd. Fundamental Analysis:

MFL is founded in 2007 as a subsidiary of Meghmani Organics Limited. The company has more than 14 years of experience in manufacturing essential chemicals. MFL is India’s one of the largest and leading essential chemical companies and is at the forefront of the Chlor-Alkali Segment.

The products of the company cater to different industries such as Alumina, Crop-Protection, Textile, Healthcare, Cosmetic, Fuel, Dyes and Dyes intermediates, and a variety of other everyday products. The Company’s total installed capacity grew from 1,88,000 TPA in 2015 to 3,15,000 TPA for Chlor-Alkali and 1,10,000 TPA for Derivatives at the end of FY 2021-22.

The company commissioned India’s first epichlorohydrin (ECH) plant with a capacity of 50,000 tonnes per annum at Dahej, Gujarat in June 2022. That will reduce its dependencies on imported products. This project was completed in record time despite the Covid 19 luckdown. This reflects the company’s strong project execution skills.

Meghmani Finechem Limited Financial Analysis:

MFL recorded a growth of 87% in its revenues from INR 831 Cr in FY 21 to INR 1,555 Cr in FY 2022. Further, the revenue is double from INR 720 in FY 2019 to FY 2022. Moreover, MFL is planning to achieve a revenue of INR 5000 crores by FY27 at a CAGR of 25% from FY22. This reflects the commitment of the management.

EBITDA also grew by 95% from INR 321 cr in FY 2019 to INR 513 Cr in FY 2021-22 on account of strong and efficient management of procurement and cost control. Further, the company recorded EBITDA growth of 29% CAGR over the last 5 years. Profit after tax has also improved by 151% to INR 253 Cr in FY22 from INR 101 Cr in FY21 on account of optimum volume contribution from the CAPEX in the past. EPS of the company have also increased from 24.27 in FY21 to 60.83 in FY22.

The MFL is a small-cap company with a market cap of INR 5261 crores with a face value of INR 10. Return on capital employed is ~29 percent while return on equity is ~31.2 percent. This data supports a strong valuation of this counter. Promoters have not changed their holdings from Dec 2021 to Mar 2022 and it remained the same at 71 percent. However, DII has increased its holdings in the company from 0% in Dec 2021 to 0.49 % in March 2022. FIIs have slightly reduced their holdings from 1.16 percent to 1.02 percent during this period.

Meghmani Finechem Limited Management:

Headquarters in Ahmedabad, Gujrat, MFL is managed under strong leadership. Mr. Maulik Patel is the Chairman & Managing Director of the company. He has been serving the company for the last 15 years. Mr. Maulik holds a Master’s degree in Business Administration from Long Island University, New York. He also holds a Master’s degree in Chemical Engineering from the University of Southern California.

Mr. Kaushal Soparkar is the Managing Director of the company. He is one of the founders of the Meghmani group. Mr. Kaushal Soparkar has been serving the company for the last 15 years. He holds a Master’s in Engineering Management from North-eastern University.

MFL Share price Daily chart
MFL Share price Daily chart
Meghmani Finechem Share price Weekly chart
Meghmani Finechem Share price Weekly chart