Hold Clean Science and Technology target of Rs 1526 Prabhudas Lilladher

Prabhudas Lilladher's research report on Clean Science and Technology

Clean Science and Technology (CLEAN) reported Q2FY25 revenue of Rs2.38bn, up 31.5% YoY and 6.3% QoQ. This YoY increase was driven by higher volumes, especially within the Performance Chemicals segment. However, due to rising raw material costs, the company experienced margin compression, despite stable product realization, which is expected to remain steady in the next few quarters. HALS sales reached 135t per month, with the plant operating at under 20% capacity utilization. Recently launched HALS products are anticipated to support revenue growth sequentially. On the capex front, the company has announced investment in a water-treatment chemical project, expected to commence operations by Dec’25, with an estimated peak revenue potential of ~Rs3bn. Additionally, the pharma intermediate plant is on schedule and is slated for commercialization within this quarter. Going ahead, we anticipate these new capex projects to drive revenue growth.

Outlook

However, margins may face downward pressure, as some of the new products have lower margins compared to the company’s legacy offerings. Currently, the company trades at 42x FY27 EPS. We maintain ‘Hold’ rating with a target price of Rs1,526, valuing the company at 46x FY26/FY27 EPS.

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