Buy Himadri Speciality; target of Rs 160: ICICI Direct
ICICI Direct is bullish on Himadri Speciality has recommended buy rating on the stock with a target price of Rs 160 in its research report dated November 22, 2018.
November 23, 2018 / 02:47 PM IST
ICICI Direct's research report on Himadri Speciality
Himadri Speciality Chemicals (HSCL) reported a steady Q2FY19 performance QoQ. Total revenues for the quarter came in at Rs 601.8 crore, up 29% YoY. Carbon sales volume in Q2FY19 were at 91.6 KT, down 2.8% YoY vs. the usual run rate of ~95 KT. Realisation in Q2FY19 was at Rs 65,047 /tonne EBITDA in Q2FY19 came in at Rs 129.8 crore with corresponding EBITDA margins at 21.6% & EBITDA/tonne at ~Rs 14175/tonne PAT in Q2FY19 came in at Rs 74.1 crore vs. Rs 51.2 crore in Q2FY18 HSCL expects to commission its speciality carbon black plant (capacity 60,000 tonne) by Q1FY20 and advance carbon material plant (capacity 20,000 tonne) by FY20 end (total capex: Rs 600 crore).
On the balance sheet front, HSCL has low geared balance sheet with FY18 debt: equity at 0.4x. With robust cash flow from operations and impressive capex spend in the new age products, we expect the debt gearing to be controlled with large amount of capex needs being met by internal accruals. On the return ratios front, it realises ~1.5x asset turnover, ~20% margins thereby realising ~20%+ RoIC. Going forward, revising our estimates, we now expect HSCL to clock sales, PAT CAGR of 21.3%, 23.4%, respectively, in FY18-20E. We value HSCL at Rs 160 i.e. 18x P/E on FY20E EPS of Rs 8.8 with a BUY rating on the stock.
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