Bodal Chemicals

Bodal Chemicals reported a topline of Rs. 372.16 cr up 12.38% on Q-o-Q basis mainly on account of increase in Dye Intermediates and Dyestuff prices due to shut down in China. EBITDA was at Rs. 39.94 cr whereas EBITDA margins improved 379 bps Q-o-Q basis to 10.84% for the quarter ended March, 2020. The company reported PAT of Rs. 26.07 cr compared to Rs. 12.85 cr reported in Q3 FY20.

The chemical sector is expected to grow in India over long term on the back of isolating China from global trade. However, medium term outlook remains subdued as there is a demand collapse and slower pick-up of the utilisation levels.

With stretched working capital cycle, operating losses in subsidiary and muted finished product prices we recommend to Hold the stock at current levels as the company trades at fair valuation of 9.52x FY20 earnings of Rs. 86 cr