Multibagger stock for 2024: After a record return delivered by the Indian stock market in 2023, investors are busy scanning value picks that may give stellar returns in 2024 as well. For such investors, there is a piece of stock market news. The Profitmart Securities research team has suggested buying Sadhana Nitro Chem shares for 12 to 18 months.
The brokerage believes that Sadhana Nitro Chem’s share price may rise to ₹204 per share level in 12 to 18 months, delivering a multibagger return to the positional investors in the long term.
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Sadhana Nitro Chem financials
Speaking on the possible multibagger stock for 2024, Profitmart Securities said, “SNCL reported a strong set of financial numbers in Q2FY24 with net sales at ₹42.01 crs as compared to a revenue of ₹36.53 crs last year in Q2, – up by 15% YoY, with EBIDTA placed at ₹12.53 crs from ₹4.22 crs last year in Q2 – up by 196% YoY with PAT at ₹2.57 crs from ₹-0.37 crs last year. Cash profits in Q2FY24 stood at ₹6.39 crs vs ₹1.30 crs in Q2 last year.”
For Sadhana Nitro Chem, H1FY23 Revenue was up by 27% YoY at Rs.81.40 crs while EBITDA at ₹20.38 crs vs a EBIDTA of ₹6.79 crs in H1 last year with the PAT at ₹2.63 crs vs a PAT of ₹0.65 crs in H1 last year, the brokerage said adding, “SNCL has been awarded the PLI scheme for manufacturing 36000 TPA of PAP in 2021, with the current production run rate of 3000 TPA.”
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What makes Sadhana Nitro Chem shares attractive?
On reasons for being highly bullish on Sadhana Nitro Chem share price return, Profitmart Securities report said, “SNCL enjoys a fully integrated business model where in a majority of SNCL’s revenue comes from exports (65-70%) and its major clients are L’oreal, Huntsman Advanced Materials, Tejin and Bayer Crop Science etc where in SNCL’s expertise lies in a niche segment of the nitrobenzene value chain, for which it sources raw materials like benzene, nitric acid, caustic potash, sulphur based chemicals and iron powder,” adding, “Currently Nitrobenzene, Meta Amino phenol (MAP), Metanilic acid, Aniline, Ortho Aminophenol, Para Amino Phenol, Ammonium sulphate, diethyl keto acid etc. Currently, 99% of revenue comes from chemical intermediates and 35% of revenue is from MAP & OBD2 with 65-75%+ exports.”
“SNCL is in a sweet spot with a long runway for growth. Some of the Growth levers available include PAP market opportunities both globally & domestically. What is important is that PAP is largely an imported product from China and with the company ramping up its PAP capacity with PLI benefits also coming in we expect a significant increase in volumes from April 2024 onwards going ahead,” Profitmart research said.
Sadhana Nitro Chem business & valuations
Profitmart Securities says that on a rough cut basis, in FY24E, Topline is expected to touch ₹176 crs, followed by ₹300 crs in FY25E and ₹450 crs in FY26E. On the bottomline level we expect the company to record a PAT of ₹15 crs in FY24E which is expected to bounce back to ₹42 crs in FY25 and ₹75 crs in FY26. Thus on a conservative basis, SNCL should record a EPS of ₹5.15 for FY24E. For FY25E and FY26E we expect that earnings traction for SNCL will continue to be strong wherein we expect a EPS of ₹14.42 and ₹25.76 respectively.
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“Also another attractive point for SNCL is that EPS growth over the next four years between FY23 to FY26 is expected to average 80-100% plus YoY. On the other Cash earnings in absolute terms are expected to touch ₹61 crs & ₹98 crs in FY25 and FY26 respectively which is another positive,” the brokerage added.
Sadhana Nitro Chem share price target 2025
On suggestions to stock market investors regarding Sadhana Nitro Chem share price outlook, Profitmart Securities said, “The company management is confident of improving EBIDTA margins in going ahead via operational efficiency and better product mix. Looking at SNCL’s steady financial track record, strong product domain, dominant market share, and strong promoters, we expect the stock to get re-rated in the future. Hence we believe that the SNCL stock should be purchased at the current price for a price target of around ₹204 over the next 18 months.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 05 Jan 2024, 02:00 PM IST
