1 AKSHARCHEM share price target reports by brokerages below. See what is analyst's view on AKSHARCHEM share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Despite sequential improvement in EBITDA margin in Q1FY20, we do not see any major turnaround in the margin (expect margins to decline from the levels of 1QFY20) and returns ratios profile in the medium term. Hence, we discontinue our coverage on the stock with a Sell rating and revised target price of Rs 144 (Vs Rs 260 earlier). At CMP, the stock is trading at 16.7x and 14.9x FY20E and FY21E, earnings which is higher than its last five years average of 14x and is expensive in our view, given the slowdown in the industry. In the past, the company used to get higher valuation due to improving earnings backed by realization.
The completion of capex plan, will transform AksharChem business to more stable earnings from FY20E onwards. However, in the near term till the new unit get stabilized and the company is able to pass on the rise in input costs, we believe that the earnings are likely to remain under pressure. As per the industry sources, with the resumption in the production activities in China, intermediate prices are expected to remain subdued. Besides this, short supply of some of the key raw materials is expected to keep input costs higher. The stock has corrected further, since our last update dated 5th Nov (Reduce). At CMP, the stock is trading at 11.2x/10.8x FY19E/FY20E which in our view is trading at higher level. Hence, we recommend SELL (Reduce earlier) with a revised target price of Rs302 (earlier Rs485), valuing it at 10x.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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