ICICI Securities research report on Rossari Biotech
Rossari Biotech’s (Rossari) Q2FY25 HPPC revenue growth (+6.2% YoY) was hurt from softer demand and restricted ethylene oxide (EO) capacity. Rossari opted to cater to volumes for exports where realisation was better, and it was developing market. Textile segment revenue was hurt from lower realisation and weak sales in Bangladesh/Egypt. Though Rossari’s gross profit margin improved by 120bps QoQ, EBITDA margin dipped 10bps QoQ to 13.2%; thus, restricting EBITDA growth to just 3.7% YoY. Rossari reiterated its guidance towards revenue growth of 12-13% for FY25 with stable EBITDA margin at 13.2–13.5%.
Outlook
Rossari believes that EO capacity addition should also help in accelerating revenue growth in H2FY25. We tweak our EPS estimates lower by ~6% each for FY25E/FY26E, and cut our TP to INR 830 (vs. INR 885) on unchanged FY26E P/E multiple of 25x. Downgrade to HOLD (from Add).
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