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PL Capital Report
PL Capital initiates coverage on Paradeep Pharma Ltd. with ‘Accumulate' rating and sets a target price of Rs 120, based on 10x FY28E EPS.
According to the brokerage Paradeep has positionied itself to capitalise on the import substitution opportunity in India's chemicals sector, through backward integration, product mix optimisation, and capacity expansion. The brokerage also highlighted that the company is expanding phosphoric and sulfuric acid capacity (+57% and +100%, respectively) and targets to achieve full backward integration by FY29.
Further, it is shifting its portfolio toward high-value complex fertilizers, thus reducing reliance on DAP.
Paradeep is expanding its fertiliser capacity to reach ~5.0mmtpa by early FY29. Also, the MCFL merger will strengthen Paradeep's presence in South India.
While elevated raw material prices may exert near-term margin pressure, the brokerage believes the company's integrated operations, expanding scale and merger synergies will drive sustained earnings growth over the medium term.
PL Capital estimates revenue/Ebitda/PAT CAGR of ~10%/18%/23% over FY25–28E, driven by capacity additions, product mix improvement and integration benefits.
At current market price, Paradeep trades at ~9x FY28E EPS and ~6x FY28E EV/Ebitda. Initiate coverage with ‘Accumulate'.
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