Home/ Markets / Stock Markets/  This chemical stock has potential to give 35% return, says Jefferies
Back

Shares of Anupam Rasayan India have remained under the sell-off heat throughout the last one year. The chemical stock made its 52-week low of 547.10 apiece on BSE in mid June 2022 and after that it as surged to the tune of 835 apiece levels today. The stock has given some upside in recent sessions that probably has fueled expectations of brokerage Jefferies. The research report published by Jefferies suggests that the stock may come out of the base building mode and it may go up to 1030 apiece levels in long term, giving up to 35 per cent return to its positional shareholders. Interestingly, the brokerage had earlier given a long term target of 1,000 to this chemical stock, which means Jefferies has upgraded its long term target of the stock.

On strong fundamentals that is expected to boost Anupam Rasayan share price in long term, Jefferies says, "Reducing working capital intensity via inventory reduction (shifting more clients to 6-monthly pricing resets) and higher asset turns from Fluorination (2.5x projected vis-à-vis ~ 1x on current portfolio) should improve ROCE over FY24-25E. ARIL has surplus land and utilities that will help the company achieve higher asset turns on its fluorination capex."

"Standalone revenues rose 25% y/y and were 3% below JEFe. Gross margin (-40bps q/q) and EBITDA margin (-110bps q/q) fared in line with JEFe and indicate margin resilience on the back of pass-through of raw material costs. PAT was, however, 16% below JEFe due to elevated interest expenses on working capital debt and FX loss on foreign currency debt of 4.4bn," the brokerage added.

On its suggestion to positional investors in regard to Anupam Rasayan shares, Jefferies said, "Management expects FY23 revenue growth at the upper end of guidance range of 25-30%, with stable margins due to firm offtake agreements. We have raised FY23E EBITDA 5% on stable margins and forecast EBITDA/PAT CAGR of 24/27% over FY22-25E. Its small revenue base provides meaningful upside optionality from potential fluorination contract wins. Maintain Buy, with a revised Rs1,030 PT (vs. Rs1,000 previously) at an unchanged 38x P/E as we roll over."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Updated: 28 Oct 2022, 12:58 PM IST
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started
×
Get alerts on WhatsApp
Set Preferences My Reads Watchlist Feedback Redeem a Gift Card Logout