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Yes Securities Report
Rossari Biotech Ltd.'s reported operating profits at Rs 542 million (up 16% YoY; down 4% QoQ) missed our and street estimates on weaker earnings traction in subsidiaries and weaker demand sentiment in the home personal care performance chemical segment.
The Ebitda margin at 13.9% (Q2: 13.3%) nevertheless improved QoQ as raw material price environment improved. The standalone earnings were steady with SA. Ebitda at 319 million growing by 22% YoY and 15% QoQ, primarily on expansion in SA operating margin to 13.5% (Q2: 11.6%), even as revenue at 2.4 billion (down 12% YoY; down 2% QoQ) stood weaker.
Demand environment remains challenging in textile specialty chemical segment, plus HPPC faced headwinds during the quarter due to a particular customer, which the company is trying tide over by onboarding of new customers.
In the longer run, under normalised operating conditions, we expect the operating margins to restore to 14-15% levels.
In addition, Rossari Biotech continues to innovate, within the its four core chemistries, developing products for new applications, across product segments.
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