Motilal Oswal's research report on Clean Science & Technology
CLEAN’s reported EBITDA in 1QFY25 was below our estimate at INR947m (+24% YoY), with a gross margin of 65.4% (vs. 61.4% in 1QFY24). EBITDAM expanded to 42.3% from 40.5% in 1QFY24. The revenue contribution of Performance Chemicals increased 2% YoY, while that of Pharma & Agro Intermediates declined 1% YoY. PAT grew 12% YoY to INR659m. There was strong YoY growth across segments, led by healthy volumes. Europe and China markets witnessed meaningful growth. The management highlighted that there was average 60-65% capacity utilization across segments, with 70% utilization for the Performance Chemical segment (excluding HALS). CFCL has commenced production of 3 HALS products, namely HALS 622, HALS 944 and HALS 783, with another product to start production in Aug’24.
Outlook
The stock is currently trading at ~44x FY26E EPS of INR36.1 and ~33x FY26E EV/EBITDA. We value the stock at 40x FY26E EPS to arrive at our TP of INR1,440.
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