HDFC Securities suggests Navin Fluorine, Nocil, 4 others chemical stocks to buy

Chemical producers reported healthy revenue growth and adequate pass through of raw material cost increase, said domestic brokerage and research firm HDFC Securities. Sharing its top stock recommendations, the brokerage said it has Buy ratings on chemical stocks Navin Fluorine, Galaxy Surfactants, Aarti Industries, NOCIL, Sudarshan Chemicals and Neogen Chemicals. “AIL’s constant focus on Capex and R&D will enable it to remain competitive and expand its customer base.

The toluene segment in India is mainly untapped and catered to through imports; AIL will benefit in the long term by entering this segment,” said the brokerage on Aarti Industries with a target price of ₹ 1,155. Meanwhile, the brokerage has retained its Buy rating on Navin Fluorine, with a target price of ₹ 4,640 on the back of earnings visibility, given long-term contracts; tilt in sales mix towards high-margin high-value business, capacity expansion led growth, and strong R&D infrastructure. HDFC Securities’ Buy recommendation on Galaxy Surfactancts with a price target of ₹ 3,295 is premised on stickiness of business, as over 50% of the revenue mix comes from MNCs and stable EBITDA margin, since fluctuations in raw material costs are easily passed on to customers.

Whereas, its Buy tag on NOCIL with a target price of ₹ 310 is premised on ramp-up in capacity utilisation; robust volume growth on the back of pick- up in demand in the tyre industry; and expansion of margin with focus on specialised rubber chemicals. “Our BUY recommendation on Neogen Chemicals (NCL) with a target price of ₹ 1,900 per share is premised on increasing contribution of the high-margin CSM business to revenue, entry into the new-age electrolyte manufacturing business, capacity-led expansion growth opportunity, constant focus on R&D, and improving return ratios and strong balance sheet, going forward,” it said. Two major global players shifting away from the pigment business is a tailwind for Indian pigment manufacturers.

The brokerage believes Sudarshan Chemical (TP: ₹ 620) is in a sweet spot to seize this opportunity through product offerings similar to those of global players. MORE FROM THIS SECTION See All Premium Premium Fake reviews on e-commerce websites: Govt to bring fram . .

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