Buy Rossari Biotech; target of Rs 974: KR Choksey

KR Choksey is bullish on Rossari Biotech has recommended buy rating on the stock with a target price of Rs 974 in its research report dated February 10, 2023.

Broker Research

February 16, 2023 / 15:02 IST

KR Choksey's research report on Rossari Biotech

Rossari Biotech Ltd (RBL) consolidated revenue declined by 9.1% YoY and 8.5% QoQ at INR 3893mn due to subdued demand at the subsidiaries. Stable performance was reported by Textile and AHN segment. On a standalone basis, the company reported a revenue of INR 2369mn(-1.7%/-11.8%) one account of decrease in revenue from Home, personal care and performance chemicals (HPPC) segment. EBITDA for the quarter is reported at INR 542mn (+13.4% YoY -4.2%). The EBITDA margins improved +277 bps YoY/ +62bps QoQ at 13.9% owing to softening in the key raw material prices. Rossari’s net profit increased by +17.4% QoQ (+12.7% YoY) to INR 257mn on the account of better operating margins and lower finance cost. PAT margins for the quarter stood at 6.6%. (+128bps YoY, +98 bps QoQ). EPS is reported at INR 4.66.

Outlook

We estimate PAT to grow at 35.5% CAGR over FY22-24E with EBITDA margin range of 13.5% - 15%. We revised our target price at INR 974/share(Earlier target 1252) (P/E multiple 30x to FY24 EPS) and retain our BUY recommendation on the stock (upside: 40.6%)

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