Specialty Chemicals Sector Check - Lackluster R&D Expenses: Motilal Oswal
The absence of sufficient R&D spend is likely to challenge the sustainability of rich valuations that the companies are commanding
BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
In this report, we delve into the research and development expenditure of 52 Indian chemical companies. Our research shows that Indian companies spend significantly less on R&D (0.5-0.6% of revenue) vis-a-vis their global peers (3-4% of revenue).
Our numerous interactions with industry experts have highlighted this lacuna, which may challenge the terminal growth of 5-6% that the current stock prices of most companies are commanding, even after assuming a high growth trajectory of 15 years in our three-stage reverse discounted cash flow.
The absence of sufficient R&D spend is likely to challenge the sustainability of rich valuations that the companies are commanding.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.