Buy Atul: target of Rs 6690: ICICI Securities

What happened

ICICI Securities reported that Atul Ltd's Q2FY27 EBITDA fell 7.8% year on year, with weak crop protection demand and epoxy spread compression cited. Atul announced an open-market buyback of INR 900mn at a maximum price of INR 7,500 per share.

Confirmed

Global impact / market context

Lower profit at Atul can limit cash generated for operations and investment, while weaker crop protection demand and epoxy spreads pressure results. The buyback uses company cash to repurchase shares, which can support the share price but reduces cash available.

Analyst inference

ICICI Securities cut its EBITDA estimates for the next two fiscal years and lowered its target price to INR 6,690 from INR 7,700, while keeping a BUY rating. This signals the analyst expects weaker earnings but still sees value in the stock.

Analyst inference

What to watch

1. Atul's EBITDA fell 7.8% year on year in Q2FY27, while standalone EBITDA fell 13.9% and subsidiaries' EBITDA rose 20%, so watch whether subsidiary growth continues. Confirmed
2. ICICI Securities proposes a target price of INR 6,690, based on a lower estimated price-to-earnings multiple of 20 times instead of 22 times, so watch earnings progress against that estimate. Proposed
3. Watch whether crop protection demand recovers and epoxy spreads widen, since these factors pressured results; continued weakness could keep costs rising faster than prices and hurt profit. Analyst inference

Evidence

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