Buy Rossari Biotech; target of Rs 520: ICICI Securities

Moneycontrol • 11 days ago

Original source

Key Investment Pillars

  • Rossari Biotech's Q2FY27 EBITDA grew 20.9% YoY, driven by strong export momentum, particularly in HPPC and textile chemicals, and a favorable product mix.
  • The company is rationalizing its lower-margin products and institutional/B2C operations, while ramping up higher-margin pharma and aroma chemical businesses.
  • Rossari expects FY27 revenue growth of mid-to-high teens and EBITDA margin of ~12%, with margin improvement expected in FY28 as pharma, aroma, and new ethoxylation capacity ramp up.
  • The company is exploring a greenfield manufacturing facility in Saudi Arabia to leverage the region's petrochemical ecosystem and serve demand in the Middle East, oil & gas, and international markets.

Thesis Validation Checklist

  • Investors should watch for signs of continued export momentum, particularly in HPPC and textile chemicals, and progress in rationalizing lower-margin products and expanding higher-margin businesses.
  • Improvement in EBITDA margin and utilization of ethoxylation capacity are key signals to validate the thesis.
  • Any significant updates on the proposed greenfield project in Saudi Arabia and its potential impact on the company's growth and margins should be closely monitored.