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    Buy Advanced Enzyme Technologies, target price Rs 458.5: HDFC Securities

    Synopsis

    Advanced Enzyme Technologies Ltd., incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 3744.01 Crore) operating in Agriculture/Horticulture/Livestock sector.

    buy
    Promoters held 52.55 per cent stake in the company as of 30-Sep-2021, while FIIs owned 16.27 per cent, DIIs 8.67 per cent.
    HDFC Securities has buy call on Advanced Enzyme Technologies with a target price of Rs 458.5. The current market price of Advanced Enzyme Technologies Ltd. is Rs 335.45.

    Time period given by analyst is six months when Advanced Enzyme Technologies Ltd. price can reach defined target.
    Advanced Enzyme Technologies Ltd., incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 3744.01 Crore) operating in Agriculture/Horticulture/Livestock sector.

    Advanced Enzyme Technologies Ltd. key Products/Revenue Segments include Enzymes and Export Incentives for the year ending 31-Mar-2021.


    Financials
    For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 127.98 Crore, down -7.23 % from last quarter Total Income of Rs 137.95 Crore and up 5.79 % from last year same quarter Total Income of Rs 120.97 Crore. Company reported net profit after tax of Rs 30.27 Crore in latest quarter.


    Investment Rationale
    Enzymes industry has very high entry barriers on account of extensive R&D focus and long gestation period before getting registration approvals for products in USA and EU. Most companies are now moving away from synthetic products to eco-friendly solutions and enzymes. The three future growth pillars of the company comprises of continued investment in R&D, expansion of its geographic presence and constant focus on inorganic growth opportunities. It estimates revenue/EBITDA/PAT CAGR of 16%/16%/17.3% over FY21-23E. Company has net debt free Balance Sheet with cash & equivalents of around Rs 320cr as on Mar-2021. The company continues to look for inorganic growth opportunities impact of which is not included in our assumptions. Management has guided for a broader EBITDA margin range of 42-48% considering likely increase in overhead expenses and some pressure on gross margin. It expect smargins to remain more or less stable in the 45-47% range over FY21-23E. The enzyme industry is dominated by big MNCs like Novozymes, DSM Nutritional Products, BASF etc. However, at the same time smaller players like Advanced Enzyme are gaining ground in the segment helped by innovation and newer technologies. It feels investors can buy the stock in the band of Rs 380-385 and add more on dips to Rs 332.5 for base case target of Rs 422.5 (23.5x FY23E EPS) and bull case target of Rs 458.5 (25.5x FY23E EPS) over the next two quarters.

    Promoter/FII Holdings
    Promoters held 52.55 per cent stake in the company as of 30-Sep-2021, while FIIs owned 16.27 per cent, DIIs 8.67 per cent.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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