Accumulation zone – 15-17
Market cap – 477cr
Target – 20/24/28 ( 2 to 6 month)
Target – 45/55+ ( 18 To 25 months)
Vikas Ecotech nowadays is going South every day and is showing Signs of weakness
Reasons for Weakness?
Rupee Depreciation is the major Reason as 80% of its Raw Materials are Imported and Only 50% of its Output is exported.So there is major concern for remaining 30% .
Company has already taken steps to manufacture One of its Key Raw 2-EthylHexyl Thioglycolate material In India which we expect will be available by Early Next year .
This new facility will Produce 16%-20% of Raw material Used Inhouse which will aid in margin expansion and also provide a natural Hedge to Supply disruption or increase in Other Raw material Prices to the Tune of Rs.15 Crores Approx.
Since company is carrying backward Integration There is minimum Risk of its new Project and we could further see more Backward Integration in next few years.
This Correction is a Opportunity that should be Utilised for Accumulating the Stock .
Key Risk : Imported Raw materials and dependence on China.
However we feel Management is proactive to understand the dynamics and already started backward integration to control Cost,Quality and to reduce dependence on China.
We feel company has a Long way to go and many such new projects could be announced in the years to come.