Buy Rossari Biotech, target price Rs 1095: Yes Securities

Yes Securities has buy call on Rossari Biotech with a target price of Rs 1095. The current market price of Rossari Biotech is Rs 681.95.

Rossari Biotech, incorporated in the year 2009, is a Small Cap company (having a market cap of Rs 3769.63 Crore) operating in Chemicals sector.

Rossari Biotech key Products/Revenue Segments include Organic/Inorganic Heavy Chemicals, Commission and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 390.38 Crore, down -8.42 % from last quarter Total Income of Rs 426.26 Crore and down -10.21 % from last year same quarter Total Income of Rs 434.77 Crore. Company has reported net profit after tax of Rs 25.66 Crore in latest quarter.

The company’s top management includes Mr.Edward Menezes, Mr.Sunil Chari, Ms.Meher Castelino, Mr.Goutam Bhattacharya, Mr.Aseem Dhru, Mr.Robin Banerjee, Maj.Gen.(Retd.)Sharabh Pachory. Company has Deloitte Haskins & Sells LLP as its auditors. As on 31-12-2022, the company has a total of 6 Crore shares outstanding.

Investment Rationale
Ebitda at 319mn growing by 22% YoY & 15% QoQ, primarily on expansion in SA operating margin to 13.5% (2Q: 11.6%), even as revenue at 2.4bn (-12% YoY; -2% QoQ) stood weaker. Demand environment remains challenging in TSC segment, plus HPPC faced headwinds during the quarter due to a particular customer, which the company is trying to tide over by onboarding of new customers.

In the longer run, under normalized operating conditions, the brokerage expects the operating margins to restore to 14-15% levels. In addition, Rossari continues to innovate, within its four core chemistries, developing products for new applications, across product segments.

Promoter/FII Holdings
Promoters held 68.44 per cent stake in the company as of 31-Dec-2022, while FIIs owned 8.63 per cent, DIIs 14.08 per cent.