The company received a buy call for a 38 percent potential upside from a brokerage firm. The share price of the company moved up by 1.94 percent on Friday and closed at Rs. 639.20 per share, compared to its previous closing price of Rs. 627.05 apiece.
With a market cap of Rs. 7,887.53 crore, Archean Chemical has a ‘buy’ rating from Axis Securities with a revised target price of Rs. 885 per share, implying an upside of 38 percent from the closing price of Friday at Rs. 639.
According to the Brokerage firm, despite rising global volatility and a slower-than-expected rebound in the Chinese economy and real estate sector, the company remains conservatively bullish about Bromine and its derivatives’ near-term future.
However, given the smaller size and huge addressable market, ACIL is optimistic about attaining 60-70 percent utilization from the new derivative facilities, as well as sustained strong uptake from the Industrial Salt (IS) sector and recovery in the Sulphate of Potash (SOP) segment.
The brokerage firm is optimistic about Archean Chemical, noting strong growth drivers that will help in attracting customers and gaining market share.
The company’s strong growth drivers include increased use of bromine in agrochem and pharmachemistries, overall improvement in construction activities, forward integration into high-value business with significant demand from the world’s largest regions, rising geopolitical tensions in the Middle East encouraging diligent diversification of supply chains by major global players, and a decrease in earnings volatility.
Archean acquired Oren Hydrocarbons Private Limited during the quarter and will be able to offer other specialized products for oil drilling beyond CBR bromine derivatives, and will be able to expand its portfolio of products.
The analysts at the brokerage firm anticipate strong IS volumes and SOP business regenerating traction, steady development in Bromine derivative and the recent acquisition of Oren Hydrocarbons will help ACIL to its product portfolio offering to oil drilling companies.
In terms of financials, the company’s consolidated revenue at Rs. 413 crore, up by 13% YoY and 42% QoQ, above the brokerage’s expectation by 39%.
While the EBITDA of the company was at Rs. 145 crore, 52% higher on a QoQ basis and 34% better than Axis Securities’ estimates, the EBITDA margin grew to 35.25%, up by 238 bps QoQ.
The net profit stood at Rs. 102 crore, up by 4% YoY and 54% QoQ, with an overall performance above the brokerage’s estimate by 34%.
Archean Chemical Industries Ltd. is a leading specialty marine chemical manufacturer based in India and engaged in producing Industrial Salt, Bromine and Sulfate of Potash.
Written by Shivani Singh
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