BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Atul Ltd.'s Ebitda decline of 30% YoY/ 15% QoQ to Rs 1.55 billion was ~4% below estimates while profit after tax down by 39% YoY/ 13% QoQ to Rs 903 million was in-line but aided by higher other income (+170% QoQ).
Persisting macro-headwinds will result in delayed ramp-up of newly commissioned and upcoming projects (Rs 17.6 billion over FY23-25E) and will keep profitability under check.
Outlook and Valuation
We believe persisting demand weakness across its key sub-segments will restrict realizing full sales potential of its newly commissioned plants. This in-turn will keep return ratios muted in the medium term.
We cut our FY24 and FY25 earnings by 18%/14% to factor slower recovery and retain ‘Sell’ rating with revised target price at Rs 5700 (26 times September-25E earnings per share).
Faster than expected demand revival in Atul’s key products remains a key risk to our rating/ target price.
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