IIFL has initiated coverage with Buy rating on Himadri Speciality Chemical and target price of Rs 240, implying potential upside of 32 percent as it expects the stock to continue to command premium valuations.
The stock price rallied more than 4 percent intraday Thursday.
The company has strong competitive position in base business and high-margin new products are key growth drivers for the company, the research house said.
IIFL expects new products to add Rs 500 crore to EBITDA by FY23.
Integrated manufacturing and R&D capabilities are key strengths of the company while positives are strong earnings growth, high return ratios and margins, the brokerage house said.
It expects EPS to grow at a CAGR of 40 percent over FY18-20 and 28 percent over FY18-23.
At 14:46 hours IST, the stock price was quoting at Rs 186.80, up Rs 5.25, or 2.89 percent on the BSE.
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