Buy Rossari Biotech; target of Rs 1015: YES Securities

YES Securities' research report on Rossari Biotech

Rossari’s reported operating profits at Rs 636mn (+12% YoY; +10% QoQ) The Ebitda margin at 13.1% (Q1: 14.1%), lower on account of higher other costs and decision to grow volumes at minor cost of margins. The standalone earnings stood stronger with S.A. Ebitda at Rs483mn growing by 73% YoY & 38% QoQ, driven by a 14% YoY and +18% QoQ growth in revenue and improved Ebitda margin of 14.5%. HPPC segment saw strong contribution from Institutional cleaning, paints home, and personal care, reporting a growth of 21%, TSC grew by 5 %, while AHN was down by 28% QoQ which was result of prudence as difficulties were seen on payment terms leading the decision to reduce the feed business and met seasonally weak quarter due to double Shravan.

Outlook

To supplement its further growth, announced expansion of Dahej facility to foray into specialty chemicals and ingredients for subsidiaries. Unitop facility current capacity of 36k mtpa of ethoxylation operating at optimal levels, additional facility of 30k mtpa being added to meet future demand. Both these expansions will take place in phased manner till Q3FY25. We maintain BUY rating with revised target price of Rs 1,015/sh.

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