Neutral Atul; target of Rs 6795: Motilal Oswal

Motilal Oswal recommended Neutral rating on Atul with a target price of Rs 6795 in its research report dated January 20, 2024.

Broker Research

January 21, 2024 / 14:50 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on Atul

Atul (ATLP) reported revenue in line with our estimates in 3QFY24. While revenue in the Life Science Chemicals segment declined 31% YoY, it increased by 2% YoY in the Performance & Other Chemicals segment. Gross margin came in at 47.1% (down 10bp YoY), while EBITDAM declined 30bp YoY to 13.3% during the quarter. Management highlighted that realization was lower for the company with increased volumes in the domestic market partly compensating for the weak demand in the export market. Decline in earnings this quarter is attributed to lower prices and underperformance of certain subsidiaries. The Life Science Chemicals’ contribution to EBIT dipped notably to 39% (from 82% in 3QFY23), whereas the contribution of Performance & Other Chemicals to overall EBIT jumped to 61% in 3QFY24 (from 16% in 3QFY23). Lower price realization and subdued demand in LATAM markets resulted in weak performance in the Life Science Chemicals segment.

Outlook

The stock is trading at 46.5x FY25E EPS of INR141.7 and 26.2x FY25E EV/EBITDA. We value the stock at 40x Dec’25E EPS to arrive at our TP of INR6,795. On a one-year forward basis, ATLP trades at 42.5x. We maintain our Neutral rating on the stock.

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