Buy Atul; target of Rs 8294: Sharekhan

Sharekhan's research report on Atul

Topline rose 17% y-o-y and 5% q-o-q, with operating Profit of Rs. 243 crore and adjusted PAT of Rs. 112 Crore surpassing our estimates, attributed to margin enhancements in LSC and POC. Revenue growth was due to higher volumes across all sub-segments in both domestic and international markets. Stable operations at Atul Products Ltd and higher sales from other Group companies such as Amal Ltd, Rudolf Atul Chemicals Ltd, and DPD Ltd, contributed to the increase in volume. Although selling prices were lower, reduced input costs led to a rise in profit.

Outlook

We are upgrading our rating on Atul Ltd. from Hold to Buy, with a revised target price of Rs. 8294. This upgrade reflects the recovery observed across various segments and a valuation of 35x FY26E EPS and 28x FY27E EPS, which indicates significant potential for further upside from current levels.

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