The shares of this company is in focus after Motilal Oswal, a leading brokerage company, extended its view on this company relating to its healthy performance. In this article, we will look at the rationale behind Motilal Oswal.
With a market capitalisation of Rs 20,286 crores, the shares of Atul Ltd are currently trading at Rs 6,890 per share, down by 16 percent from its 52-week high of Rs 8,180 per share. In the last one year, the stock has delivered a return of 12 percent approximately.
Brokerage Rationale
Motilal Oswal has set a target price of Rs 8,450, signalling an upside potential of 22.5 percent from its CMP. The rationale comes from robust earnings performance in Q4FY25, well ahead of estimates. Both its Life Science Chemicals (LSC) and Performance & Other Chemicals (P&OC) segments reported excellent YoY revenue expansion of 18 percent and 21 percent, respectively, with the EBITDA growth of 51 percent YoY and PAT growth of 121 percent YoY.
Improvement in both segments, especially LSC (410bps) and P&OC (660bps), significantly boosted profitability. Capacity utilisation is improved as compared to FY24, however, outputs have been impacted by geopolitical disruptions and low user demand.
The upbeat contribution from JVs and subsidiaries further reinforces the optimistic expectation for the company. Motivated by the outstanding performance in FY25, the company’s FY26 EBITDA/PAT estimates have been upgraded by 9%/12%, and a growth CAGR of 13%/16%/19% in revenue, EBITDA, and PAT is expected over the FY25-27 cycle. The management stress on capacity addition and continuous capex plans are in sync with the long-term growth path.
With these encouraging developments, Atul is expected to return strongly in the next 2-3 years, and at the current stock price of 29x FY27E EPS, the target price has been assigned at Rs. 8,450, with a BUY rating. The firm’s strong fundamentals and growth drivers, especially given its capacity expansion and strong segment performance, support this valuation and forecast.
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Financial Highlights
Atul Ltd reported a consolidated revenue of Rs 5,583 crores in FY25, up by 18.13 percent from Rs 4,726 crores in FY24. On a year-on-year (YoY) basis, revenue rose by 19.81 percent from Rs 1,212 crores in Q4 FY24 to Rs 1,452 crores in Q4 FY25. On a quarter-on-quarter (QoQ) basis, it increased by 2.47 percent from Rs 1,417 crores in Q3 FY25 to Rs 1,452 crores in Q4 FY25.
It posted a net profit of Rs 499 crores in FY25, up by 54.01 percent from Rs 324 crores in FY24. Net profit grew by 120.34 percent YoY from Rs 59 crores in Q4 FY24 to Rs 130 crores in Q4 FY25. On a QoQ basis, it increased by 11.11 percent from Rs 117 crores in Q3 FY25 to Rs 130 crores in Q4 FY25.
About the company
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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