Neutral Clean Science & Technology; target of Rs 770: Motilal Oswal

What happened

Motilal Oswal reiterated a Neutral rating on Clean Science & Technology and set a target price of Rs 770. It reported lower gross and EBITDA margins in 2QFY26, citing higher raw material and crude-linked input costs and limited ability to pass those increases on to customers.

Confirmed

Global impact / market context

Higher input costs that Clean Science cannot fully pass to customers reduce profit per sale, matching the reported declines in both gross and EBITDA margins. If this pressure persists, earnings may weaken, although Motilal Oswal maintained its estimates for the next two financial years.

Analyst inference

The report attributes limited pricing flexibility partly to Chinese competitors offering products at lower prices, while Middle East tensions and crude-linked feedstock costs raised input expenses. This puts pressure on both sides of Clean Science’s operating equation: costs rose, but selling prices could not fully adjust.

Confirmed

What to watch

1. Watch for changes in raw material and crude-linked feedstock costs; lower costs could ease pressure on gross margin, the share of sales left after direct production costs. Analyst inference
2. Track whether Clean Science can pass more input-cost increases to customers without losing business to lower-priced Chinese competitors, which could improve profit per sale. Analyst inference
3. Compare future operating results with Motilal Oswal’s maintained earnings estimates and projected revenue, EBITDA and profit growth over its forecast period; the report supplies no updated results. Analyst inference

Evidence

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