Clean Science Q1 Review - Inline Result Led By Volume Recovery: Nirmal Bang

Nirmal Bang Report

Clean Science and Technology Ltd.'s Q1 FY25 operational performance came broadly in line with our expectations on account of volume driven recovery across the portfolio. Despite the high cost base in its subsidiary Clean Fino-Chem Ltd., overall Ebitda margin improved 157 basis points/72 bps YoY/QoQ.

Hindered Amine Light Stabilizer Series is expected to clock ~20% utilisation by the end of FY25 and full scale up is expected in FY27. The management has guided for ~15% Ebitda margin in the initial years and plans to gradually ramp up to ~25% i.e. materially lower than the company level margin.

While we are positive on the process innovation backed business model and assign premium valuation multiple (40 times price to earning) over peers; near-term risk reward is not favorable. Timely scale up of HALS and upcoming new projects remains the key.

Maintain Accumulate after rolling forward estimates to June 26E earnings with a revised target price of Rs 1,560.

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