Buy Zuari Agro Chemicals; target of Rs 758: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss' research report on Zuari Agro Chemicals

PPL (40% JV) reported strong numbers despite tepid revenue growth (down 9%) with sharp improvement in EBITDA / mt to INR 3,680 versus INR 2,255 in Q2FY17 driven by lower input cost. This led to PAT catapulting 144% to INR 660mn. MCFL’s performance was broadly in line with estimate with revenue declining 5% and EBITDA and PAT jumping 3% and 40% to INR 620mn and INR 210mn, respectively.

Outlook

ZAC offers strong rerating potential driven by margin improvement, lower interest driven by reduction in working capital and better return ratios. Structural changes like DBT followed by ZAC’s dominant position are likely to trigger rerating. Hence, we raise target multiple to 15x FY19E EPS and raise TP to INR 758 and maintain ‘BUY’.

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