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

HDFC Securities has buy call on Advanced Enzyme Technologies Ltd. with a target price of Rs 458.5. The current market price of Advanced Enzyme Technologies Ltd. is Rs 384.55 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 4293.96 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 30-06-2021, the company reported a Consolidated Total Income of Rs 137.95 Crore, up 2.26 % from last quarter Total Income of Rs 134.90 Crore and up 19.19 % from last year same quarter Total Income of Rs 115.74 Crore. Company reported net profit after tax of Rs 39.86 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. The brokerage 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 58.1 per cent stake in the company as of June 30, 2020, while FIIs held 11 per cent, DIIs 8.7 per cent and public and others 22.2 per cent.