Hold Clean Science and Technology; target of Rs 1329: Prabhudas Lilladher

Prabhudas Lilladher's research report on Clean Science and Technology

Clean Science and Technology (CLEAN) reported Q3FY25 revenue of Rs2.4bn, marking a 23.7% YoY increase and a 1.1% QoQ growth. The rise in revenue was primarily driven by higher sales volumes across segments, while product realizations largely remained stable. A slight decline in phenol prices, a key raw material, contributed to improved gross margins. Sales of HALS increased to 200tn per month, up from 135tn in the previous quarter, though the plant continues to operate at lower utilization levels. Management has provided guidance for HALS sales of 3,000–4,000tn in FY26, driven by both existing and newly launched products. During the quarter, the company introduced two new products: DHDT, a pharmaceutical intermediate, and BHT, an antioxidant. On the capex front, the Rs1.5bn investment in Performance Chemical 1 remains on track, with commercialization expected in July’26. Additionally, construction for a second performance chemical plant focused on water treatment is set to begin in Feb and is scheduled to be operational by Jan’26. Looking ahead, new capex projects are expected to drive revenue growth.

Outlook

However, the margin profile may face some pressure, as certain new products have lower profitability compared to the company’s legacy offerings. At its current valuation of 40x FY27 EPS, we maintain a ‘Hold’ rating on Clean Science, with a target price of Rs1,329 valuing it at 38x FY27 EPS.