Target: ₹185

CMP: ₹140.05

In Q1FY24, Himadri recorded a revenue of ₹950.9 crore, indicating a decrease of 8 per cent compared with the previous quarter and 9 per cent compared with the same period last year. The EBITDA for the quarter was ₹134 crore, reflecting a 7 per cent quarter-on-quarter growth and a 87 per cent increase year on year. The company reported a PAT of ₹86.1 crore, showing a 13 per cent quarter-on-quarter increase and a 123 per cent increase year on year.

The company recently acquired a 12.79 per cent stake in Sicona, an Australian start-up. Sicona’s advanced silicon-composite anode technology is capable of delivering 50-100 per cent higher capacity compared with traditional graphite anodes.

Between March and June, the company decreased its gross debt by ₹154 crore, bringing it down to ₹682 crore. However, there was a ₹15-crore increase in net debt during the April-June quarter, resulting in a total net debt of ₹215 crore compared with ₹200 crore as of March 2023. Despite the increase in net debt, this reduction in gross debt has contributed to strengthening the company’s balance sheet, as a result, the rating outlook has been revised from Stable to Positive, indicating an improved outlook for the company’s financial standing.

The board of directors has reviewed and given its approval for the acquisition of the entire equity shares of Combe Projects Private Ltd. Upon the successful completion of this acquisition, Combe Projects Private Ltd will become a wholly-owned subsidiary of Himadri Speciality Chemical Ltd.

Given the company’s impressive track record of strategic acquisitions, consistent debt reduction, and steady margin improvement, we maintain a positive outlook on the company’s prospects with a target price of ₹185, based on a P/E ratio of 20x using a projected EPS of ₹9.25.