Specialty chemical stock trades near 52-week low. Brokerage has ‘Buy’ tag

AMET market should start seeing improvement in volumes as the economy stabilises and premiumisation and green chemistry are emerging global trends, it said in a note.

“GSL witnessed EBITDA growth amid volume pressure driven by rising EBITDA/mt. Although we expect EBITDA margins to moderate in the near-term, volume uptick in the AMET region and the FMCG-linked business model provide sustained growth visibility,” the note stated. The brokerage house has retained its ‘BUY’ rating on the specialty chemical stock with a target price of ₹4,330 apiece. The shares of the company are trading near its 52-week low level of ₹2,560 apiece that it had hit in May this year.

The brokerage anticipates volume growth for the current year to remain flattish with AMET and Europe witnessing demand contraction coupled with subdued consumer sentiment.

“However, we believe growth to re-emerge FY24 onwards with a revival in AMET business, along with more clarity in emerging demand scenario in Europe market. We remain optimistic about the medium to long-term prospect of the business and expect volume growth to recover in FY24 at 8-10%. High margin trajectory is likely to continue driving bottom-line in FY23 (expect PAT growth of 35%YoY),” it added.

Prolonged recessionary pressure affecting demand in Europe and US and no recovery in AEMT regions are key risks to the brokerage’s recommendation.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.