Buy Neogen Chemicals, target price Rs 1870: ICICI Direct

ICICI Direct has buy call on Neogen Chemicals with a target price of Rs 1870. The current market price of Neogen Chemicals is Rs 1324.45. Time period given by analyst is one year when Neogen Chemicals Ltd. price can reach defined target.

Neogen Chemicals Ltd., incorporated in the year 1989, is a Small Cap company (having a market cap of Rs 3300.59 Crore) operating in Chemicals sector.

Neogen Chemicals Ltd. key Products/Revenue Segments include Organic/Inorganic Heavy Chemicals and Other Operating Revenue for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 157.65 Crore, up 18.83 % from last quarter Total Income of Rs 132.67 Crore and up 70.03 % from last year same quarter Total Income of Rs 92.72 Crore. Company reported net profit after tax of Rs 15.56 Crore in latest quarter.

Investment Rationale
The brokerage retains positive view on Sumitomo Chemical amid SCC Japan desiring to outsource its active intermediates to Sumitomo India. The company has been doing a capex of | 100-110 crore with a revenue visibility of | 200 crore initially. This would be for five molecules at the moment. However, the brokerage expects the scale to improve over the coming time. The company has also bought land parcel at Dahej. It expects meaningful capex announcement, going ahead, which would be used for export business. It expects this export business can be margin accretive to the overall group. It values Sumitomo Chemicals at 45x P/E FY24E EPS to arrive at a target price of Rs 520/share. It maintains BUY rating on the stock.

Promoter/FII Holdings
Promoters held 60.19 per cent stake in the company as of 31-Mar-2022, while FIIs owned 4.36 per cent, DIIs 18.64 per cent.