Prabhudas Lilladher's research report on Clean Science and Technology
Clean Science and Technology (CLEAN) rep orted revenue of Rs1.8 bn (-27% YoY/ -4% QoQ; PLe ~Rs1.9bn) majorly led by lower sales volumes. EBITDA dropped by -23% YoY/ -2% QoQ to Rs 748mn (PLe Rs696 mn/consensus estimate – Rs 765mn) while EBITDA margin came at 41.3% (vs 39.4%/40.5% in Q2FY23 and Q1FY24 respectively. PAT dropped on account of lower operating profit to Rs522mn (-23% YoY/ -11% QoQ; PLe Rs435mn consensus estimate – Rs 613mn). Though management mentioned that overall domestic market was less impacted than exports, there will be subdued performance for H2FY24, in our view.
Outlook
We remain apprehensive on margins as most raw materials are crude derivatives (that may rise along with crude oil prices). We broadly keep our FY24/FY25E EPS estimates unchanged due to persisting demand concerns across business segments, though recovery is expected post 2 quarters. The company trades at 60x FY24 EPS. Maintain ‘Hold’ rating with TP of Rs1,368 (earlier Rs 1,418) valuing at 48x FY26 EPS.
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