Target: ₹1,069
CMP: ₹728.25
We view Anupam Rasayan (Anupam) as a direct beneficiary of the global outsourcing boom, government’s focus on ‘Make in India’ and the ‘China Plus One’ strategy. With its expanding chemical capabilities – organic and inorganic – and aggressive capacity addition, Anupam is a strong outsourcing partner for global agrochem/pharma players.
Given its large about ₹1,000 crore capex in place and a recent order adding about ₹475 crore/year of revenue visibility, we estimate a 30 per cent revenue CAGR over FY22–25. PAT, meanwhile, would outpace to a 38 per cent CAGR on the back of operating leverage.
This coupled with a reduction in working capital would uplift the RoCE from 11 per cent to 18 per cent.
Key risks: Anupam has high customer concentration with the top ten contributing 80 per cent to revenue. Loss of any customer may lead to loss of business that can hurt earnings; Phenol and benzene are the key raw materials, and any sharp increase in RM and end-product prices may further push up working capital requirements; and We are modelling in revenue ramp-up based on recent order-wins and product launches. That said, order cancellations or delays can impact earnings adversely.
