Rossari Biotech Q1 Results — HPPC, New Capacities To Drive Earnings Growth, Says DRChoksey Maintaining Buy

Rossari Biotech's Q1 FY26 revenue grew by 11.0% YoY (-6.2% QoQ) to Rs 5,437 million., in-line with our estimates, the growth was entirely driven by volume expansion of 11.0% YoY. The performance was supported by robust momentum across HPPC and AHN segments, partially offset by continued weakness in the TSC vertical.

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Deven Choksey Report

Rossari Biotech Q1 FY26 performance was a mixed bag, with revenue in-line with our estimates, while the Ebitda and net profit stood below our estimates by 3.9% and 5.9% respectively, impacted by elevated employee costs and institutional business losses.

Excluding the institutional and B2C verticals loss, adjusted Ebitda grew by 15.3% YoY, while the adjusted margins stood at 13.8%.

Management expects stronger recovery in overall performance from Q2 FY26, supported by ramp-up in institutional orders, exports. Moreover, it has guided for a healthy 14.0–15.0% YoY growth in revenue and Ebitda on a full-year basis, aided by robust traction in the HPPC segment and an anticipated recovery in the institutional/B2C verticals.

The upcoming EO capacity and backward integration are expected to enhance cost efficiency and margins, while ongoing expansions at Unitop and Tristar diversify the portfolio into high-growth chemistries.

The new Southeast Asia formulation facility strengthens export capabilities, and rising operating leverage, coupled with a robust innovation pipeline, further supports our positive view on the business outlook.

We revise our FY26E/FY27E EPS estimates by +2.0%/-3.3%, respectively, as we factor in improved visibility based on management's forward guidance for FY26E, while the downward adjustment in FY27E factors in a more gradual margin recovery trajectory than previously anticipated.

Valuation:

We have rolled forward our valuation basis to June-27 estimates.

We value Rossari Biotech at a 23.0 times Jun'27 EPS, implying a target price of Rs 860, supported by strong momentum in HPPC and AHN segments and improving breakeven trajectory in the institutional business.

We reiterate our 'Buy' rating on the stock.

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