Rossari Biotech Q2 Results Review - New Capacities To Drive Volume Growth In FY26: Nirmal Bang

Nirmal Bang Report

Rossari Biotech Ltd.’s Q2 FY25 operating performance came below consensus estimates on lower than expected HPPC^ revenue growth and elevated costs. Similar to previous quarter, Ebitda growth (~4% YoY) is lagging behind gross profit growth (~12% YoY) on account of higher freight cost, professional fees and fresh hiring related expenses in Buzil Rossari. 

Exports grew by ~32% YoY in H1 FY25 vis-a-vis Domestic growth of 5%. New customer acquisition in exports has come at the cost of margin as initially Rossari is bearing the freight burden under the current environment. 

While we do not see immediate levers for margin expansion, Rossari is in a position to deliver double digit volume growth over the next two-three years on the back of TAM expansion in HPPC and new capacity addition, in our view.

Maintain Buy after rolling forward the valuation to Sep’26E at 25 times PE (two/three year average PE 30 times/40 times) with a revised target price of Rs 955 (earlier Rs 940).

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