Khambatta Securities' research report on Ester Industries
Ester reported robust growth in 4Q FY22 and FY22, driven by strong performances across segments. Operating revenues increased by 30.7% y-o-y and 41.7% over 4Q FY22 and FY22, respectively. EBITDA growth of 10.2% y-o-y and 4.2% in 4Q FY22 and FY22, respectively was lower than the topline growth with margins declining, as a fall in Film margins more than offset the higher margins in Speciality Polymers (SP) and Engineering Plastics (EP) segments. Film margins were lower due to higher raw material cost. PAT was broadly flat on a y-o-y basis during the quarter as well as the full financial year due to higher interest expenses and higher tax. The net proceeds from the divestment of the EP business are expected to be approximately Rs 225 crore.
Consequently we increase our target multiple to 8.0x (from 7.0x) FY24E EPS to arrive at a price target of Rs 200, reiterating a BUY with an upside of 52%.
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