You may gain from this chemical manufacturer despite expensive valuations

What do you do when a promising stock becomes expensive? Typically, you have to wait until the euphoria dies down. However, in the case of SRF, there might be a way to circumvent the high valuations. The curious case of SRF and Kama Holdings SRF, one of India's largest chemical manufacturers, has shown impressive growth. Over the past five years (as of the 12 months ending December 2023), its revenue has grown by 14 per cent annually, and profit after tax has soared by around 18 per cent annually. The market rewarded this performance, with its share price compounding by approximately 36 per cent annually over the same period. Based on these growth figures, an investment in SRF seems like a no-brainer. However, at a sky-high price-to-earnings (P/E) ratio of 50 times, it trades significantly higher than its five-year median P/E ratio. Investing in SRF at these valuations is risky. However, there is a way to benefit from SRF's growth indirectly: through Kama Holdings, SRF's holding company. Kama owns about 50 per cent of SRF and has itself provided im