Multibagger specialty chemical stock could rally further as ICICI Securities sees more upside
The domestic brokerage firm has Buy on multibagger stock that has rallied over 146% in a year's period
PremiumNeogen Chemicals manufactures specialty organic bromine-based chemical compounds as well as specialty inorganic lithium-based chemicals compounds.The specialty chemical stock has appreciated at 90% CAGR (compound annual growth rate) in the last two years.
The brokerage firm ICICI Securities has retained its Buy rating on multibagger stock Neogen Chemicals with a target price of ₹2,160 apiece with target period of around twelve months, on the back of better growth outlook from custom synthesis business. Neogen Chemicals shares have rallied over 146% in a year's period. So far in 2022 (year-to-date), the stock has gained about 5%.
Neogen's net profit during the third quarter increased 23% year-on-year (YoY) owing to higher depreciation and finance cost post commissioning of phase I & II unit at Dahej. The topline broadly stayed in line with the brokerage's estimates while bottomline was lower due to higher than estimated depreciation and finance cost.
The company reported revenue growth of 56% from the same quarter last year to ₹132.6 crore, led by higher growth from both segments such as organic chemical (up 52% YoY) and inorganic chemical segment (up 69% YoY).
Phase 1 and Phase 2 capex at Dahej bodes well for advance intermediates and custom synthesis revenue growth. Higher share of value added business portfolio to improve margins profile of the business. Allocation of incremental FCF towards organic/inorganic growth likely to expand return ratios further are some of the key triggers for future price performance, as per ICICI Securities.
Apart from Neogen Chemicals, in its chemical coverage, the brokerage also likes Sumitomo Chemicals as it believes the company's future revenue growth would be increasing CRAMS opportunity from SCC Japan and Nufarm. Its Buy tag on Sumitomo Chemicals comes with a target price of ₹505 per share.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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