Motilal Oswal's research report on Atul
ATLP reported revenue below our estimates, with both the Life Science Chemicals and Performance & Other Chemicals segments posting a decline in revenues QoQ (up 24% YoY, down 19% YoY, respectively). Gross margin was at 47.2% in 3QFY23 with EBITDAM declining 120bp QoQ to 13.6%. While contribution from the Life Science Chemicals segment to EBIT has improved significantly to 82% in 3QFY23 (from 67% in 2QFY23), contribution from the Performance & Other Chemicals to overall EBIT declined to 16% in 3QFY23 (from 34% in 2QFY23).
Outlook
We build in a revenue/EBIDTA/PAT CAGR of 9%/8%/7%, respectively, over FY22-25E. We value the stock at 35x Dec’24E EPS to arrive at a TP of INR8,328. On a one-year forward basis, ATLP trades at 33.9x. We reiterate our Neutral rating on the stock due to its limited upside potential.
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