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You are here : IndiaNotes >> Research & Analysis >> Companies >> Bodal Chemicals Ltd. >> Research

Bodal Chemicals Q3FY18: To report a healthy PAT CAGR of ~17-18% between FY17-FY19E; Buy

SPA Securities | 10 Feb, 2018  | Follow Author | Add to my Favourites 
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Bodal Chemicals (BCL) is a leading manufacturer of dyes Intermediates/dyestuff and has diversified into speciality chemicals. Company reported steady ~10% revenue growth whereas increased operating costs affected margins. Capex of INR 1 bn has been implemented in 9MFY18. We expect strong revenue/earnings growth in FY19 and maintain buy rating with target price of INR 258 valuing core business at 18x of FY19 earnings.


Highlights:


- Steady ~10% revenue growth


- EBITDA margin contracted by ~185 bps YoY


- Capex to maintain leadership in dyestuff domain


Outlook & Valuation


With the increase in dyestuff & dye intermediate capacity and steady ramp up in Trion utilization, we expect revenues to pick up in FY19. Focus on operating cost reduction by implemention of Thionyl Chloride and captive power plant would help in margin expansion. Increasing proportion of high margin speciality chemical business and higher captive consumption for increasing dyestuff production will boost EBITDA margin to +19% in FY19. Bodal is expected to report a healthy PAT CAGR of ~17-18% between FY17-FY19E. We maintain buy rating with target price of INR 258 valuing core business at 18x of FY19E earnings.


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About SPA Securities

SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.

 

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