Hold BASF India; target of Rs 1484: Emkay Global Financial

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26 Aug, 2025 12:21

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BASF in its annual analyst meet laid out its strategy which includes improving RoCE from ~6% to 10% in the next 2-3 years by cost optimization, improving product portfolio and increasing capacity utilization. The focus is on improving profitability in key segments. Management expects healthy volume growth in Agrochemicals in the coming quarters, which shall partially restrict weakness ensuing from Automotive, Construction and Refining sectors. BAFS aims to launch 15 new products in Agrochemicals unit in the next 5 years. The Dahej plant, which was commercialized in Oct’14 (capex of Rs11bn), operated at the ~70% capacity utilization level for FY20 and reported sales of ~Rs13bn (17% of FY20 sales). The capacity expansion (2x) for polymer dispersions at the plant is underway.

Overall balanced exposure for a business that encompasses numerous segments shall continue to deliver moderate growth in coming years. Margin volatility in Materials and Surface Tech remains a risk. We roll forward our valuations to Sept’22E earnings and raise our TP to Rs1,484 (28x Sept’22E EPS vs 24x earlier). We retain Hold and EW in EAP.

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