Home / Markets / Stock Markets /  HDFC Securities has 'Buy' tag on specialty chemical stock, raises target price
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Aarti Industries' (AIL) constant focus on Capex and R&D will enable it to remain competitive and expand its customer base, believes HDFC Securities. The toluene segment in India is mainly untapped and catered to through imports, the specialty chemical manufacturing company will benefit in the long term by entering this segment, the brokerage stated in a note post Aarti Industries' third quarter results.

The brokerage house HDFC Securities has maintained its Buy recommendation on Aarti Industries shares with a revised target price upwards of 1,380 per share (from 1,330). The specialty chemical stock has surged over 65% in a year's period, however, the counter is down about 4% in 2022 (year-to-date or YTD) so far.

Aarti Industries' Q3FY22 revenue/EBIT grew 40/10% year-on-year (YoY), owing to the pass-through of higher costs to the customers. Trial runs at the new expanded block at the intermediate facility are underway, with commissioning targeted for Q4FY22.

“Q3 EBITDA/APAT were 203/339% above our estimates, mainly attributable to 6.1 billion of one-off termination fees in EBITDA, and lower-than-expected depreciation and finance cost," the brokerage noted.

Aarti Industries Limited (AIL) is a leading Indian manufacturer of speciality chemicals and pharmaceuticals with a global footprint. It manufactures chemicals used in the downstream manufacturing of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments and dyes.

The management highlight that capex of 45- 50 billion would be spent from FY22 to FY24, mainly to add over 40/50 new products for speciality chemicals/pharma segments respectively. The company has also guided for 25-35% year-on-year (YoY) APAT growth in FY22, HDFC Securities' note highlighted.

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

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