Synopsis:
Atul Ltd shares are in focus after Motilal Oswal has initiated a Buy call on the stock with a potential upside of 31% citing numerous upticks in its business.
The shares of this leading chemical company are in focus after leading brokerage house Motilal Oswal maintained its bull case in the stock, citing an upside of 31 percent from its current level.
With a market capitalization of Rs 20,132 crores, the shares of Atul Ltd are currently trading at Rs 6,838 per share, representing a 16.25 percent decline from its 52-week high of Rs 8,165.25 per share. Over the past five years, the stock has delivered a positive return of 39 percent.
Leading brokerage house, Motilal Oswal, has cited a Buy call on the stock and has assigned a target price of Rs 8,975 per share, signaling an upside potential of 31 percent from its previous day closing price of 6,832.50 per share.
The brokerage noted that Atul Ltd delivered a strong performance in Q1FY26, in line with its estimates. The company’s revenue grew by 12 percent year-over-year to Rs 1,478 crore, showing solid business momentum.
The Performance & Other Chemicals segment saw a 14 percent increase YoY, while the Life Science Chemicals segment grew by 6 percent. Profit after tax jumped 18 percent YoY to Rs 132 crore, and EBITDA rose by 5 percent YoY to Rs 235 crore.
Down the line, Motilal Oswal projects a 13 percent revenue CAGR, 16 percent EBITDA CAGR, and a 23 percent PAT CAGR from FY25 to FY27 and has said that the stock is trading at attractive valuations.
The stock has delivered an ROE and ROCE of 9.10 percent and 12.81 percent respectively, and is currently trading at a P/E of 40.27x as compared to its industry average of 35.49x.
Additionally, the company has a very low exposure to debt, which can be identified from its Debt-to-Equity ratio of only 0.04x (Current Debt 202 crore) and a high interest-paying capacity, which can be understood from its high Interest-Coverage ratio of 31.8x.
Atul Ltd is an international chemical company engaged in Life Science Chemicals and Performance & Other Chemicals businesses. It produces aromatics, bulk chemicals, agrochemicals, APIs, and epoxy products.
The company also makes tissue culture plants and has retailing businesses in crop protection and polymers. Its diverse product line caters to agriculture, automotive, pharmaceutical, construction, and textile industries. Atul’s chemicals find application in everything ranging from flavors and fragrances to electronics and personal care.
Written by Satyajeet Mukherjee
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