iifl-logo-icon 1
IIFL

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

Q3FY24 Review: Atul Ltd: Export demand remains weak…

24 Jan 2024 , 10:13 AM

Atul's weak Q3 earnings confirm analysts of IIFL Securities belief that the exports demand remains under pressure, and there is limited potential for an immediate rebound. Nevertheless, domestic market demand remains stable. The Life Science Chemicals segment is affected by subdued demand in the Latin America market. Ongoing price pressures are squeezing margins in Performance Chemicals. Near-term earnings outlook is bleak however, the capex has started getting commissioned, benefits of which will result in earnings scale up over the next couple of years. Analysts of IIFL Securities cut FY24-26 earnings by 26-14% and roll forward their TP to Mar’25 (from Dec’24). With a 1YF (FY26 EPS) target multiple of 25x, analysts of IIFL Securities TP comes down from Rs6,300 and now stands at Rs5,850. 

Q3 earnings below estimates: 

Q3 results reiterate weakness due to a demand slowdown and margin compression in the Life Science Chemicals segment. Sequentially, export prices for Para cresol and Resorcinol have declined which would have impacted the segment’s margins. Though 2,4- D prices remain suppressed, a sequential increase would have resulted into 110bps improvement in segment’s margin. Ebitda was ~5% below estimates, however higher depreciation and lower other income resulted into PAT missing estimates by ~34%. 

Commissions Caustic-chlorine plant: 

Atul commissioned the much awaited 300TPD Caustic chlorine and 50Me power plant recently and incurred capex of Rs10.3bn. The unit has potential to generate sales of ~Rs5bn while by-product Chlorine will consumed captively for MCA. It has also commissioned 2,200tpa pharma plant and has begun operations in pilot plants of polymers. Analysts of IIFL Securities estimates build-in ramp-up for these capacities over the next couple of years. 

Trim earnings by 26-14%: 

Sustained weak demand and suppressed pricing has resulted into FY24-26 earnings downgrade by 26-14%. Analysts of IIFL Securities anticipate a gradual recovery in margins for the performance chemicals segments and bake in the ramp up of recently commissioned capacities. The base will turn favourable and thus will arrest steep earnings decline. Roll forward valuation to Mar’25 (from Dec’24) and revise TP downwards to Rs5,850 (25x FY26 EPS).

Related Tags

  • Atul Ltd
sidebar mobile

BLOGS AND PERSONAL FINANCE

Read More
Knowledge Centerplus
Logo

Logo IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

appapp
Knowledge Centerplus

Follow us on

facebooktwitterrssyoutubeinstagramlinkedin

2024, IIFL Securities Ltd. All Rights Reserved

ATTENTION INVESTORS
  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

RISK DISCLOSURE ON DERIVATIVES
  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

plus
We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.