ICICI Direct has given Buy recommendation for Neogen Chemicals recommended buy rating on the stock with a target price of Rs 1085 in its research with a target price of Rs. 1085 in its research report issued on Jun 01, 2021
ICICI Direct’s research report on Neogen Chemicals
Neogen Chemicals reported topline growth of 13% YoY to Rs 92.7 crore against our expectation of Rs 87.1 crore. The growth was driven by higher growth in the inorganic chemical segment (up 31% YoY) largely on account of better volume growth. Revenue from organic chemical was up 7% YoY to Rs 72 crore. Growth from organic chemical segment remained subdued owing to capacity constraint. OPM for the quarter expanded 80 bps YoY to 20% leading to EBITDA growth of 17% YoY to Rs 18.5 crore vs. our estimate of Rs 17.2 crore. Gross margins expanded 386 bps YoY, 196 bps QoQ to 43.5%, largely on account of higher realisation and better product mix. Lower taxes (30% vs. 35% in Q4FY20) boosted bottomline growth, which was up 28% YoY to Rs 9.3 crore against our estimate of Rs 8.4 crore.
We value the company at 38x PER of FY23E (~0.8x PEG). We arrive at a target price of Rs 1085 (earlier Rs 1040). We maintain our BUY rating on the stock.