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ICICI Securities Report
Atul Ltd’s Q1 FY25 earnings print was strong driven by healthy revenue growth in life sciences with a jump in two, four-D exports volumes; and a leap in the performance segment’s Ebit margin, improving 760 basis points QoQ to 9.1%.
The performance segment benefited from notable growth in exports volume for key products, and commissioning of Chloralkali plant. Costs are generally benign for Atul during the first quarter, and grow through the year – we noted this in FY24 too.
Net profit growth is restricted to just 8.3% YoY due to higher depreciation cost and tax rate. Nonetheless, the recovery has been much faster than our assumption, which is driving our earning per share estimates higher by 25%/9% for FY25/ FY26.
Our target price is revised to Rs 6,380 (from Rs 5,840; unchanged 28 times FY26E earning per share). Maintain 'Reduce'.
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