Buy Atul; target of Rs 8455: Motilal Oswal

Motilal Oswal's research report on Atul

Atul (ATLP) reported revenue 7% above our expectation in 3QFY25. Revenue in the Life Science Chemicals segment increased 23% YoY, while it rose 24% YoY in the Performance & Other Chemicals segment. Gross margin came in at 50.5% (+340bp YoY), while EBITDAM expanded 250bp YoY to 15.8%. EBITDA increased 48% YoY to INR2.2b, and PAT jumped 63% YoY to INR1.2b. The Life Science segment continued its stellar run both in terms of revenue and margin for the fourth consecutive quarter. EBIT margin for the segment improved 10.4pp YoY, while the same improved 250bp QoQ. The Performance segment continued to do well in terms of revenue, but its margin was a bit subdued in 3Q both YoY and QoQ. We remain bullish on both segments.

Outlook

The stock is trading at ~31x FY26E EPS of INR210.6 and ~18x FY26E EV/EBITDA. We value the stock at 35x Dec’26E EPS to arrive at our TP of INR8,455. We reiterate our BUY rating.