Buy Ester Industries; target of Rs 203: Khambatta Securities

Khambatta Securities' research report on Ester Industries

Ester delivered robust growth during 3Q FY22 and 9M FY22, driven by strong performances across segments. Operating revenues increased by 43.0% y-o-y and 46.5% y-o-y in 3Q FY22 and 9M FY22, respectively. EBITDA growth of 13.1% y-o-y and 2.2% y-o-y in 3Q FY22 and 9M FY22, respectively was lower than the topline growth as margins declined with a fall in Films margin more than offsetting the higher margins in Speciality Polymers (SP) and Engineering Plastics (EP) segments. While the company is largely able to pass through higher raw material prices to the customer, higher input costs led to a decline in operating margins in percentage terms. PAT growth was broadly in line with the operating performance as PAT margin saw a decline.

Outlook

The Ester stock has appreciated 77% since we initiated coverage on the company on 30 September 2020. Based on a target multiple of 7.0x FY24E EPS, we arrive at a price target of Rs 203, informing a BUY rating with an upside of 54%

More Info

At 11:10 hrs Ester Industries was quoting at Rs 135.00, up Rs 1.60, or 1.20 percent.

It has touched an intraday high of Rs 139.80 and an intraday low of Rs 133.40.

It was trading with volumes of 10,196 shares, compared to its thirty day average of 30,167 shares, a decrease of -66.20 percent.

In the previous trading session, the share closed up 1.52 percent or Rs 2.00 at Rs 133.40.

The share touched its 52-week high Rs 164.60 and 52-week low Rs 98.10 on 05 August, 2021 and 22 February, 2021, respectively.

Currently, it is trading 17.98 percent below its 52-week high and 37.61 percent above its 52-week low.

Market capitalisation stands at Rs 1,125.82 crore.

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