Buy Epigral; target of Rs 2450: Emkay Global Financial

Emkay Global Financial's research report on Epigral

Epigral posted in-line results, with revenue/EBITDA/PAT up 20%/12%/12% YoY. This was largely led by i) improvement in ECUs in the caustic soda business and higher realizations for ECH (because of ADD); ii) volume growth in the derivatives and specialty segment (CPVC, ECH); and iii) lower interest outflow on partial repayment of debt. Revenue contribution by the derivatives and specialty segment was 54% in FY25 vs 45% in FY24 (Epigral maintains FY28 guidance of 70% contribution by derivatives). Capex for doubling CPVC and ECH capacities is on track, with commissioning expected in H1FY27 (FY26 capex guidance: Rs4.5bn). Epigral maintains volume growth guidance of 15-20% for coming couple of years (EBITDA margin to be ~25%).

Outlook

Our FY26-27 estimates are unchanged; we introduce FY28 estimates. We retain BUY on Epigral; raise our TP by 6.5% to Rs 2450 from Rs 2300, at 20x Mar-27E EPS (on rollover).