00:00United, a such company, which has lost its results from Q1 FY27 in the end of Q1 FY27.
00:06The stock was so strong that the stock reached 20% to the upper circuit.
00:12But what are the headlines that have been saying?
00:16Come on, today's explainer, we have to decode these facts and see what is the actual reality of this explosive
00:25growth.
00:26780%
00:28The whole market is seeing a massive number in the last quarter.
00:33In the past, the net profit rate of 780% of the rate of profit is about 16.73 crore.
00:41This is such a jump which can be found in any way.
00:45If you look at net profit numbers, the shock value is more clear.
00:50The current quarter is about 16.73 crore, the previous quarter is about 1.9 crore
00:57and the previous year is about 9.4 crore compared to 9.4 crore.
01:02I mean, this comparison is a different story of a different story.
01:05In this explainer, we have to explain exactly the same strategy.
01:09Is this historical surge in the real long-term sustainable growth of a new start?
01:15Or, like in the market, there are a lot of truth behind these numbers in the real world.
01:21Before we go, we understand the core operations of the company,
01:26which is the chemical engine, which is the case of its chemical engine.
01:29If we talk about the ground reality,
01:31it's a completely debt-free, or a curse-mukth company in Gujarat.
01:35This is mainly sulfuric acid, oleum, and sulfur dioxide,
01:39which is called the bulk chemicals in textiles and food processing,
01:43like core industries, and the operations are quite solid.
01:47Because the revenue has actually seen 104% year-over-year jump in the revenue,
01:52which has now been around 96.5 crore.
01:55In all these, the most interesting development is their capacity expansion.
02:00These people have increased their sulfur dioxide capacity from 45 tons per day,
02:05and are directly targeting 105 tons per day.
02:08They are also in the last two years.
02:09And here, the most important thing is that for this 12 crore expansion,
02:14there is not only 1 crore from the outside.
02:17Everything is based on the internal accrual.
02:43Now, let's move on to a very crucial point of the catch.
02:48That means margin compression is the real reality of margin compression.
02:52Here, there is a big red flag that comes from here.
02:54When the headline profit margin is compared to the actual core business,
02:58it seems slightly different.
03:01The headline P.A.T. margin is 17.33% per day,
03:05but after removing the extraordinary accounts,
03:08the core operating margin is actually 690 basis points.
03:13This is a clear margin compression,
03:15which shows the actual pressure on the business.
03:18Now, the question is, why is this?
03:20Why is this?
03:21This is why it happened,
03:22because this quarter's net profit,
03:24a huge increase of 5.61 crore crore crore,
03:27actually a one-off GST incentive.
03:30This extraordinary amount was recorded under the other income,
03:34which has seen so massive profits directly.
03:37So, if we remove this extra income from the picture,
03:41then it's a grittier reality in front of the revenue.
03:45In addition to the revenue,
03:45the company actually has intense pricing pressure
03:48and the increase of input costs.
03:51The bulk chemicals is a commodity business,
03:53where the limited pricing power is always a problem.
03:57However, it is necessary to admit that the margin pressure,
04:01even with the capital efficiency,
04:03the capital efficiency has also collapsed.
04:04The return on capital employed is 32.14% per day,
04:08which is the historical five-year average double.
04:12That means, the allocation and allocation of capital
04:14is quite strong.
04:16So, let's move on to this explainer,
04:18which is the last part,
04:19the valuation and the market verdict.
04:22If you compare the valuation to the sector average,
04:25then Amal is trading quite heavily on the premiums.
04:2831.30 P.E. Ratio
04:30and 7.72 P.E. Ratio
04:33compared to the other specialty chemical peers,
04:35it's firmly in a very expensive territory.
04:39And if you look at the stock history,
04:41then this is a story of two extremes.
04:44In the past one year,
04:45it has given a return of 1,874%
04:49and created a legendary wealth.
04:52But on the other hand,
04:54the performance of the last year
04:55is relatively volatile and negative,
04:58where it has clearly underperformed the broad market.
05:02So, after wrapping this explainer,
05:04the biggest and final question is now made.
05:08Does this aggressive debt-free expansion
05:11really justify its premium price tag?
05:12Does it justify the truth in the truth?
05:14Or does it show a big trap
05:18to a big trap?
05:20What will the next true truth of the world
05:23will be seen in the market?
05:24that this big trap is
05:24it's a big trap.
