BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Nirmal Bang Report
Camlin Fine Sciences’ (CFIN) 4QFY23 EBITDA came in below NBIE estimate mainly on account of pricing pressure in key products and forex loss of ~Rs100mn. Revenue growth of ~10% on both YoY as well as QoQ basis was driven by Blends business and Performance Chemicals segment. Vanillin facility got commissioned during 4QFY23. HQ downstream derivatives along with Vanillin should drive growth in the coming quarters. While CFIN is also facing challenges on the destocking front from US-based clients, similar to other companies, the China re-opening has created a lot of pressure on RMs and end product pricing (mainly in Performance Chemicals segment).
While the base business might witness margin contraction in an uncertain environment, Vanillin & new products should offset the adverse impact along with operating leverage. Margin profile should improve from FY24 as catechol direct sales (at loss) should fall post Vanillin commercialization. The management expects ~50% capacity utilization in FY24 for Vanillin and overall revenue potential at peak utilization remains ~Rs8bn, assuming constant pricing. It highlighted that while the industry growth is ~4%, there is no other capacity addition in Vanillin. If CFIN executes all the existing projects well, its earnings trajectory can improve materially going forward, in our view.
Overall, we are building in Revenue/EBITDA/APAT CAGR of 17%/35%/79% over FY23-FY25E. We believe that apart from the macro concerns, execution risk is a major factor behind CFIN’s valuation multiple being at a significant discount to its peers. We maintain BUY on CFIN with an unchanged Target Price (TP) of Rs200 post earnings revision. We value CFIN at ~18x on FY25E earnings.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
As a Subscriber you get
Stories
RECOMMENDED FOR YOU
.jpg?rect=0%2C0%2C3500%2C1969&auto=format%2Ccompress&format=webp&w=75)
Society Of Indian Defence Manufacturers - Sustaining The Defence Ecosystem: Nirmal Bang
Sep 01, 2024
Dr. Reddy's - U.S., Europe Drive Growth: Nirmal Bang
Aug 23, 2024
Camlin Fine Science Q1 Results Review - Suffering Amid The Industry Headwinds: Nirmal Bang
Aug 16, 2024
Fine Organic Q1 Review - Inline Result: Nirmal Bang
Aug 01, 2024
POPULAR