Buy This Top Midcap Specialty Chemicals Stock With Rs. 941 Target Price: Top brokerage

Top brokerage firm KR Choksey suggests buying the stock of Anupam Rasayan India Ltd., for high short-term returns to gain 22.80% in 1 year.

Stock To Buy: Target Price

The Current Market Price (CMP) of Anupam Rasayan India Ltd. is Rs. 766. KR Choksey has estimated a Target Price for the stock at Rs. 941. This stock has the potential to give 22.80% return, in the upcoming 1 year. It is a mid-cap stock with a market capitalization of around Rs. 7,832 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 766
Target Price	Rs. 941
Potential 1 year return	22.80%
52 week high share price	Rs. 1,107.55
52 week low share price	Rs. 546.75

Financials

The company's revenue in FY22 was recorded at Rs. 10,660 mn, which is expected to be at Rs. 14,038 mn in FY23. Their EBITDA in FY22 stood at Rs. 2,971 mn, which is expected to be at Rs. 3,765 mn in FY23. The company's PAT in FY22 was recorded at Rs. 1,522 mn, which is expected to be at Rs. 1,894 mn in FY23.

Stock Advantages: KR Choksey

According to KR Choksey, "We are positive on the Anupam Rasayan's business outlook owing to consistent innovation, cost optimisation and benefits of backward integration on account of completion of 'Tanfac Industries' acquisition. Anupam has planned a capex worth Rs. 2,500 Mn in order to execute the strong order book where it expects asset turnover ratio of 1.75x with an incremental ROCE of 20% from these orders. We assign PE multiple of 35.0x to FY24E EPS of Rs. 26.9 to revise the target price at Rs. 941/share and retain our Buy recommendation on the stock with an upside of 22.8% at current market price."

Revenue outlook

There is a strong visibility on revenue outlook led by existing as well as new molecules. The revenue worth ~Rs. 750-800Mn is expected in FY23 from nearly 7 molecules under its product portfolio. There are above 90 products under R&D process of which 7 molecules are expected to be commercialised in FY23. Additionally, it aims to launch 5 new molecules in fluorination chemistry. The LoIs worth Rs. 26,200Mn requires planned capex of Rs. 2,500Mn which is expected to be completed by the FY23. Commercialization of few molecules has already started since FY22. It expects Rs. 4,500-5,000Mn of revenue on annual basis from these LoIs.

Cost curtailing measures

The management expects strong pricing mechanism with semi-annual revision in contracts which will include all the costs like freight, energy, inventory carrying costs, other overhead expenses etc. Commissioning of solar power plants with 12.5MW capacity in Q1FY23 and 5.4MW capacity in Q2FY23 to save almost Rs. 140Mn expenses annually FY24 onwards

Company Portfolio:

Incorporated in 2003, Anupam Rasayan India Ltd (ARIL) is headquartered at Gujarat (Sachin). The journey has evolved from conventional business towards innovation in custom synthesis and manufacturing of various molecules which are being applied in industries such as agriculture, pharmaceutical, personal care, specialty dyes and pigments and polymers. Generally, it deals with the long term contracts with its customers or MNCs.

Disclaimer

The above stock was picked from the brokerage report of KR Choksey. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.