Atul Ltd Q2FY17: Firstcall are overweight for medium to long term investment

Firstcall India Equity | May 3, 2016, midnight


SYNOPSIS

  • Atul Ltd is one of the largest integrated chemical companies of India and amongst the first five manufacturers of its chosen chemicals in the world.
  • The company achieved a turnover of Rs. 7383.50 mn for the 2nd quarter of the FY 2016-17 as against Rs. 6830.80 mn in the corresponding quarter of the previous year, an increase of 8.09%.
  • During the quarter, net profit stood at Rs. 823.20 mn as against Rs. 858.60 mn in the corresponding quarter ending of previous year.
  • During the quarter, EBIDTA stood at Rs. 1535.10 mn as against Rs. 1412.60 mn in Q2 FY16, up by 8.67%.
  • Profit before tax (PBT) increased by 2.70% to Rs. 1261.00 mn in Q2 FY17 from Rs. 1227.80 mn in the corresponding quarter of the previous year.
  • EPS of the company stood at Rs. 27.75 in Q2 FY17 against Rs. 28.95 in the corresponding quarter of the previous year.
  • For six month period of FY17, net profit stood at Rs. 1628.60 mn as compared to Rs. 1469.30 mn for the Six month period of previous financial year.
  • In H1 FY17, Net sales stood at Rs. 14134.00 mn as compared to Rs. 13088.70 mn in H1 FY16, increased by 7.99%.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 14% over 2015 to 2018E, respectively.


OUTLOOK AND CONCLUSION

  • At the current market price of Rs. 2421.05, the stock P/E ratio is at 22.83 X FY17E and 20.27 X FY18E respectively.
  • Earning per share (EPS) of the company for the earnings for FY17E and FY18E is seen at Rs. 106.05 and Rs. 119.45 respectively.
  • Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 14% over 2015 to 2018E respectively.
  • On the basis of EV/EBITDA, the stock trades at 13.62 X for FY17E and 12.20 X for FY18E.
  • Price to Book Value of the stock is expected to be at 4.59 X and 3.80 X for FY17E and FY18E respectively.
  • Hence, we say that, we are Overweight in this particular scrip for Medium to Long term investment.

 

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