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Buy Himadri Speciality; target of Rs 170: ICICI Direct

7 September, 2018 11:44 AM
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Buy Himadri Speciality; target of Rs 170: ICICI Direct

ICICI Direct is bullish on Himadri Speciality has recommended buy rating on the stock with a target price of Rs 170 in its research report dated September 07, 2018.

Himadri Speciality Chemicals (HSCL) reported a robust Q1FY19 performance. Net sales in Q1FY19 were at Rs 604.7 crore, up 34% YoY largely tracking 28% growth in realisations and 5% growth in volume Carbon sales volume in Q1FY19 were at 99,200 tonne with blended realisations at Rs 60,467/tonne (94,769 tonne, Rs 47,264/tonne in Q1’18) EBITDA in Q1FY19 came in at Rs 135.8 crore with corresponding EBITDA margins at 22.4% (EBITDA/tonne at Rs 13,685/tonne) PAT in Q1FY19 came in at Rs 76.7 crore vs. Rs 50.0 crore in the base quarter and Rs 71.2 crore in Q4FY18 HSCL is well poised to commission its speciality carbon black plant (capacity 60,000 tonne) by Q1FY20E and advance carbon material plant (capacity 20,000 tonne) by FY20 end (total capex at Rs 600 crore).

Factoring in the management commentary over some delay in executing projects as well as funding the capex through internal accruals entirely, we revise our estimates. Going forward, we expect HSCL to clock sales, PAT CAGR of 22.7% & 28.5%, respectively, in FY18-20E. We value HSCL at Rs 170 i.e. 18x P/E on FY20E EPS of Rs 9.6 with a BUY rating on the stock.


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