Buy Anupam Rasayan; target of Rs 1070: Emkay Global Financial

Emkay Global Financial's research report on Anupam Rasayan

Anupam’s Q2 EBITDA at Rs0.9bn (flat YoY/+17% QoQ) was in line with consensus/our estimates. Mgmt. guided for 20% rev. growth in H2 and reiterated its 25-30% rev. CAGR with 26-28% EBITDA margin as it targets (a) ramp-up in current products across existing and new clients (29 MNCs out of the 73 clients) and (b) higher wallet share through new launches (10 molecules in FY24E across agro-chem and pharma). The board has approved fund raise of Rs5.5bn (promoter preferential issue and convertible warrants). Working capital shot up to 360 days in H1 due to the increase in debtors because of increased domestic sales and industry slowdown.

Outlook

However, management highlighted this is transitionary and normalization of debtors/inventory would ease working capital by H2. We retain BUY with an SoTP-based TP of Rs1,070.