2 Chemical Stocks To Buy For Gains Up To 52% As Recommended By Angel Broking

Angel Broking based on stock fundamentals comes out with monthly stock picks. The stock recommendations are from different sectors and likewise the broking firm based on its heavy research has recommended 2 of the stocks from the chemicals space for returns up to.

1. Buy PI Industries: For a target of Rs. 3440, implying upside of 32% from Rs. 2606.8 per share

PI Industries is a leading player in providing Custom synthesis and manufacturing solutions (CSM) to global agrochemical players. The CSM business accounted forover 70% of the company's revenues in FY21 and is expected to be the key growth driver for the company in future. 

The company has been increasing its share of high margin CSM business driven by strong relationship with global agrochemical players. PI is leveraging its chemistry skill sets and is looking to diversify its CSM portfolio to electronic chemicals, Pharma API, fluoro chemicals, etc. which will help drive business "We expect PI Industries to post revenue/PAT CAGR of 20.0%/22.5% between FY21-FY24 driven by 20% growth in the CSM business over the next 2-3 years.

Moreover foray into new segments like electronic chemicals and APIs will also help drive growth over next 3-4 years for the company", notes the brokerage.

2. Jubilant Ingrevia: Buy for Rs. 837, for an upside of 56%

Jubilant Ingrevia was formed by spinning off the chemical and life science ingredients of Jubilant Life Sciences Ltd. The company has a vast array of products across its three divisions and is one of the top two producers of Pyridine - Beta and vitamin B3 globally.

The company derives 50% of its revenues from the life science chemicals division while the specialty chemicals and nutrition & health solution business account for 32% and 18% of revenues respectively.

At current levels the stock is trading at P/E multiple of ~17xFY23 EPS which is at a significant discount to other chemical companies. Therefore, we believe that there is value in the stock at current levels and hence rate it a BUY.

Disclaimer:

The stock picks are taken from the report of Angel Broking for February month. Readers should understand that stock markets being market linked bets pose risk of financial loss.