3 Chemical Stocks To Buy As They Could Perform Well In March Quarter

Buy Aarti Industries

Sharekhan has set a price target of Rs 1,155 on the stock of Aarti Industries, as against the current market price of Rs 957.

Aarti Industries has a diverse portfolio of basic chemicals, agrochemicals, speciality chemicals and intermediates, which are extensively used in the manufacture of pharmaceuticals, agri-products, polymers, additives, pigments and dyes.

"We expect strong revenue growth of 46% y-o-y on price hike in the domestic market and low base of last year; however, we expect muted growth on a q-o-q basis, given absence of contract cancellation fee. Margin is expected to decline by 472 bps y-o-y due to time lag to pass on input cost rise for the export business and higher energy cost," the brokerage has said.

 

SRF

For SRF too the brokerage sees strong growth and has set a price target of Rs 2800 on the stock. The company is a well diversified play with presence in speciality chemicals, flourochemicals, packaging films, coated fabricsl, laminated fabrics etc.

"High growth in speciality chemicals and refrigerants and recovery in packaging films business on improved pricing would drive strong 33% y-o-y revenue growth. Margin is expected to improve by 233 bps, as higher price is expected to drive up margin for chemical, while spreads in the packing film business are expected to see improvement," the brokerage has said.

Vinati Organics

Sharekhan has set a price target of Rs 2350 on the stock of Vinati Organics as against the current market price of Rs 2038. Vinati Organics is the world's largest manufacturer of IBB and ATBS.

"We expect strong 40% y-o-y revenue growth led by robust recovery in the ATBS business and ramp-up of butyl phenol capacity. Although margin would decline on a y-o-y basis, it is expected to post strong recovery of 106 bps q-o-q on benefit of operating leverage," Sharekhan has said.