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ICICI Securities Report
We initiate coverage on Himadri Specialty Chemical Ltd. with an Add rating, and an SoTP-based target price of Rs 600. We value its legacy business at 20 times FY27E EV/Ebitda, tyre business at three times FY27E EV/ sales and battery chemicals at three times FY27E EV/ IC.
Our valuation implies FY27E PE multiple of 35x and EV/EBITDA of 25x.
Himadri's strong moat in the coal tar value chain complemented by an integrated production model allows it a firm grasp to maximise profits. The company is expanding its coat-tar pitch supplies to export markets such as South Africa, Middle East and Australia, which should help boost coal distillation utilisation and lift profitability, in our view.
Himadri is also scaling its specialty carbon black capacity to tap into prevalent market potential. Further, it is deploying cashflows towards growing new businesses, viz. its foray into tyres – aided by notable investment, and Birla Tyres' brand recall.
It also aims to establish prominent standing in battery chemicals – starting of LFP plant, and likely to add components such as anode/battery recycling.
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