Rossari Biotech: Expanding growth opportunities, but has the stock run its course in the short term?
We see Rossari Biotech as a worthy growth stock with exceptional earnings growth rates, but post 60 per cent jump in stock price from our note in October 2020, investors can take profit off the table
June 04, 2021 / 11:21 AM IST
Rossari Biotech | The company reported higher profit at Rs 21.62 crore in Q3FY21 against Rs 18.25 crore in Q3FY20, revenue rose to Rs 209.98 crore from Rs 162.4 crore YoY.
PRO Only Highlights
Quarterly performance largely backed by improved realisations
Medium-term triggers China plus and protectionist measures for tyre industry
Valuations not inexpensive; but improved medium-term outlook
Rossari Biotech (CMP: Rs 1,270, Market Cap: Rs 6,961 crore) is acquiring Unitop Chemicals for a total consideration of Rs 421 crore at an implied multiple of 10x EV/EBITDA.
This underlines an emerging theme in the chemicals sector, where companies with pristine balance sheets are looking to consolidate market share or enter new chemistries or end-markets. With this transaction, Rossari will have a higher exposure to Surfactants-based chemicals catering to agro-chemicals and oil and gas segments. Remember, Surfactants chemistry is...