Buy Neogen Chemicals; target of Rs 1085: ICICI Direct
ICICI Direct is bullish on Neogen Chemicals recommended buy rating on the stock with a target price of Rs 1085 in its research report dated Jun 01, 2021.
June 10, 2021 / 12:22 PM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.
ICICI Direct's research report on Neogen Chemicals
Neogen Chemicals reported topline growth of 13% YoY to Rs 92.7 crore against our expectation of Rs 87.1 crore. The growth was driven by higher growth in the inorganic chemical segment (up 31% YoY) largely on account of better volume growth. Revenue from organic chemical was up 7% YoY to Rs 72 crore. Growth from organic chemical segment remained subdued owing to capacity constraint. OPM for the quarter expanded 80 bps YoY to 20% leading to EBITDA growth of 17% YoY to Rs 18.5 crore vs. our estimate of Rs 17.2 crore. Gross margins expanded 386 bps YoY, 196 bps QoQ to 43.5%, largely on account of higher realisation and better product mix. Lower taxes (30% vs. 35% in Q4FY20) boosted bottomline growth, which was up 28% YoY to Rs 9.3 crore against our estimate of Rs 8.4 crore.
We value the company at 38x PER of FY23E (~0.8x PEG). We arrive at a target price of Rs 1085 (earlier Rs 1040). We maintain our BUY rating on the stock.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.