August18 , 2022

2 chemical stocks to buy, accumulate after Q1 results as recommended by Nirmal Bang

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Domestic brokerage and research firm Nirmal Bang Institutional Equities is bullish on two chemical stocks after their respective Q1FY23 results – which are Navin Fluorine International (NFL) and Tatva Chintan Pharma Chem and has Buy and Accumulate ratings on the stocks respectively.

Chemical stocks to buy

Navin Fluorine: Navin Fluorine International’s 1QFY23 operating performance came in line with the brokerage’s estimates. Specialty Chemicals reported strong growth and the management indicated that new product pipeline in Specialty Chemicals remains strong.

NFIL continues to be the brokerage’s top stock pick in the specialty chemicals stocks coverage universe, and has maintained its Buy rating on Navin Fluorine shares with an unchanged target price (TP) of 4,500

“We believe that NFIL is gearing up for a better future considering its thrust on product & engineering R&D, capability building and talent management initiatives. We see very few companies emphasizing on technology and infrastructure development aggressively and the same should be NFIL’s edge vs peers,” the note stated.

Tatva Chintan Pharma Chem: Tatva Chintan’s (TATVA) 1QFY23 EBITDA came in about 29% below its estimate on account of higher-than-expected pressure in SDA revenue and forex loss of around 50 mn.

The brokerage house expects blended margin to remain at the current level for the next two years. Also, risk of delay in scale-up and competitive challenges are higher, in our view. Despite the near term challenges like chip shortage, raw material (RM) cost inflation and deteriorating freight scenario, Tatva Chintan Pharma Chem’s stock price performance has been flattish over the last six months.

Revenue (ex-SDA) grew by 60% YoY wherein all the sub-segments namely, PTC, PASC and Electrolyte Salts grew significantly. SDA sales were affected by semiconductor issues, geopolitical situation in Europe and extended lockdowns in China due to Covid-19 outbreak.

“While we continue to remain positive on the growth potential in SDAs, TATVA is aggressively working on other segments as well, wherein risk of delay in scale-up and competitive challenges are higher, in our view. Therefore, we maintain Accumulate rating with an unchanged Target Price (TP) of 2,650,” Nirmal Bang added.

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

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