Buy Vishnu Chemicals, target price Rs 818: HDFC Securities

HDFC Securities has buy call on Vishnu Chemicals with a target price of Rs 818. The current market price of Vishnu Chemicals Ltd. is Rs 728.1.

Time period given by analyst is six months when Vishnu Chemicals price can reach defined target.

Vishnu Chemicals Ltd., incorporated in the year 1993, is a Small Cap company (having a market cap of Rs 872.84 Crore) operating in Chemicals sector.

Vishnu Chemicals Ltd. key Products/Revenue Segments include Chemicals (Inorganic), Export Incentives, Scrap and Other Operating Revenue for the year ending 31-Mar-2021.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 197.95 Crore, down -7.80 % from last quarter Total Income of Rs 214.70 Crore and up 30.29 % from last year same quarter Total Income of Rs 151.93 Crore. Company reported net profit after tax of Rs 11.59 Crore in latest quarter.

Investment Rationale
VCL had witnessed a muted earnings growth of 7.9% CAGR during FY15-21. Going forward, , VCL can show acceleration in topline and bottomline. The brokerage expects, its revenue, EBITDA and PAT to record a growth of 16/36% and 51% CAGR over FY21-23E along with consistent FCF generation and improvement in working capital. Segment-wise, the brokerage expects Chromium and Barium revenues to grow at CAGR 15% and 17% respectively over FY21-23E. Higher PAT growth will be driven by strong operating performance across both Chromium and Barium segments where it expects segment-wise EBITDA margins to expand by 600/400 bps respectively over FY21-23E. At a consolidated level, it expects overall margins to expand by 430 bps to 15.9% in FY23E v/s 11.6% in FY21. Also strong cash flows on the back of better operating performance will result in lower debt, aiding lower interest cost which will further be earnings accretive.

Promoter/FII Holdings
Promoters held 75 per cent stake in the company as of June 30, 2021, while FIIs held 0.1 per cent, DIIs 0 per cent and public and others 24.9 per cent.