Buy Atul; target of Rs 8975: Motilal Oswal

Motilal Oswal's research report on Atul

Atul (ATLP) reported in-line revenue at INR14.78b (+12% YoY) in 1QFY26. Revenue of the Performance & Other Chemicals segment increased 14% YoY, while the Life Science Chemical segment posted 6% YoY growth. EBITDA increased 5% YoY to INR2.35b, and PAT increased 18% YoY to INR1.32b. We broadly retain our estimates for FY26/FY27. We estimate a revenue/ EBITDA/PAT CAGR of 13%/16%/23% during FY25-27. The stock is trading at ~27x FY27E EPS of INR256 and ~16x FY27E EV/EBITDA. We value the stock at 35x FY27E EPS to arrive at our TP of INR8,975. Reiterate BUY.

Outlook

We value the stock at 35x FY27E EPS to arrive at our TP of INR8,975. The upside risk could be a faster-than-expected ramp-up of new projects and products. Downside risks include weaker-than-expected revenue growth and margin compression amid teething issues in new projects.