Clean Science and Technology Limited (CSTL) is poised for further upside after breaking out of its recent consolidation range, as per a research note by Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers.
With robust technical and fundamental factors aligning, the stock presents an attractive buying opportunity for investors.
Consolidation Breakout and Pattern Target
Clean Science and Technology Limited has been trading rangebound between ₹1,330 and ₹1,430 over the past few months. However, the stock recently managed to break out decisively above this zone, closing above ₹1,430 levels consistently.
The research note pointed out that this breakout was accompanied by a violation of the bear trendline on the weekly chart. Moreover, weekly RSI and DMI indicators have turned bullish, adding credence to the emerging uptrend.
Jigar set a bullish price target of ₹1,650 for CSTL, which aligns well with the measuring implications of the recent range breakout. A stop loss below ₹1,425 has been recommended to limit downside risk.
Robust Financial Performance
Clean Science and Technology Limited has delivered strong financial results over the past few quarters, validating its premium valuations.
In its latest quarter, the company posted a net profit of ₹52.19 crore. Over the trailing twelve months, it has registered an EPS of ₹41.05, placing its TTM P/E ratio at 54.36x.
While this looks expensive compared to industry average of 16.59x, CSTL warrants this premium given its superior top line growth and profitability margins.
The company’s return ratios also remain healthy, with trailing twelve-month ROE and ROCE at 32% and 40% respectively as of Q2 FY23.
Favorable Analyst Estimates
Clean Science and Technology Limited enjoys unanimous bullish endorsement from analysts covering the stock. Out of 11 analysts tracked by livemint.com, 3 have strong buy recommendations while another 3 suggest buying the stock. There are no sell ratings on the counter so far.
Analysts’ Views
| Ratings | Current | 1 W Ago | 1 M Ago | 3 M Ago |
|---|---|---|---|---|
| Strong Buy | 3 | 3 | 3 | 3 |
| Buy | 3 | 3 | 3 | 3 |
| Hold | 4 | 4 | 4 | 3 |
| Sell | 0 | 0 | 0 | 0 |
| Strong Sell | 1 | 1 | 1 | 1 |
| Total | 11 | 11 | 11 | 10 |
Such overwhelming optimism indicates most experts and market participants expect CSTL’s growth momentum to remain intact going forward.
With both technical and fundamental factors turning favorable, the stock offers an attractive proposition for investors with medium to long term horizon.
Promoter Holding and Ownership Breakup
Promoters currently hold 75% stake in Clean Science and Technology Limited, reflecting their confidence in the company’s future potential. The remaining 25% public shareholding is split between institutional and non-institutional investors.
As per latest shareholding pattern, FIIs own 6.01% of the company while mutual fund houses have 0.50% allocation to the stock.
FII holding in CSTL has gradually increased over the past year, indicating growing foreign interest. On the other hand, mutual funds have lowered exposure from previous quarters.
Overall, the healthy promoter stake and analyst optimism make CSTL a relatively lower risk bet compared to other chemical sector stocks with similar growth profiles.
The recent breakout and bullish technical setup suggests the stock has room for 20% upside as indicated by the research target. However, investors should maintain suggested stop loss to limit capital risk.
Frequently Ask Questions
What triggered the recent breakout in Clean Science & Technology?
The stock broke out from its recent consolidation range between ₹1,330 and ₹1,430, accompanied by violation of a bearish trendline on the weekly chart. Positive technical indicators added to the bullish breakout.
What is the target price and stop loss recommended for Clean Science?
Analyst suggested a target price of ₹1,650 and a stop loss of ₹1,425 based on measuring objectives of the breakout pattern.
What is Clean Science’s latest quarterly profit and TTM PE ratio?
The company posted a net profit of ₹52.19 crore in its latest quarter. Its TTM PE ratio stands at 54.36x based on TTM EPS of ₹41.05.
What is the public and promoter shareholding in Clean Science?
Promoters hold 75% stake in the company. Remaining 25% is public shareholding split between FIIs (6.01%) and mutual funds (0.50%).
Why are analysts bullish on Clean Science despite high valuations?
The stock commands a premium valuation owing to its strong growth metrics and profitability margins. Unanimous analyst buys ratings reflect confidence in earnings momentum sustaining.
Should retail investors buy the stock after the breakout?
The technical and fundamental factors aligned makes this an attractive proposition for investors with medium to long term investment horizon.
What is the recommended stop loss for traders?
Analyst suggested a stop loss of ₹1,425, below the recent consolidation range to limit downside risk.