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Domestic brokerage and research firm ICICI Securities expects chemical companies to outperform on EPS growth again and estimates its specialty chemical coverage universe revenue to grow 19.3% year-on-year (YoY) in the second quarter ended September of the current fiscal (Q2 FY23), partly on rise in prices due to input cost inflation.
“Gross profit to grow 22.7% YoY, which indicates strong underlying trend led by our expectation of 1) SRF’s robust growth on continuous good show in ref-gas, offset by weakness in non-chemicals business, 2) Gujarat Fluorochemicals’ (57% YoY) growth on strong show in new fluoropolymers, 3) Clean Science’s (52% YoY) growth on low base and 4) Navin Fluorine’s EBITDA expansion from commissioning of HPP plant,” the note stated.
Sharing its top specialty chemical stocks picks, the brokerage has Buy ratings on Gujarat Fluorochem, Chemplast Sanmar, EPL, Tatva Chintan, and Phillips Carbon Black.
Meanwhile it has Hold stances on SRF, Galaxy Surfactants, Rossari Biotech and Clean Science and Technology. Also, it has Add tag on Sudarshan Chemical while Reduce on Navin Fluorine shares.
The brokerage house expects Rossari Biotech to benefit from the acquisitions. Tatva Chintan’s performance was hurt by muted SDA sales. Galaxy Surfactants’ volumes may dip on weakness in AMET, but EBITDA/kg may be healthy. Chemplast’s volumes to dip YoY on seasonality and high base, but PVC spread is likely to be weak which implies steep drop in EBITDA YoY. PCBL’s gross profit/kg is expected to improve on the back of better India sales, and benefits in exports market. EPL and Sudarshan are likely to continue facing cost headwinds, i.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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(This story has not been checked by Kashmir Bulletin and is auto-generated from other sources)
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