Accumulate Clean Science and Technology; target of Rs 769: Prabhudas Lilladher

What happened

Prabhudas Lilladher recommended accumulating Clean Science and Technology shares and set a target of Rs 769. The report said Q2FY27 revenue was INR3bn, up 22.4% year over year, with HALS revenue doubling year over year; higher raw material costs limited the company’s ability to pass on cost increases.

Confirmed

Global impact / market context

Revenue growth and stronger HALS volumes could support future sales, but cost increases that cannot be passed to customers can reduce profit per sale. The investment case also depends on new capacity starting production and existing capacity being used more fully.

Analyst inference

The report describes mixed operating conditions: HALS is expanding, while HQ and Catechol capacity runs at 30–35% utilisation and margins have moderated. It says recent share-price weakness has made the valuation more attractive, but gives no share price or valuation multiple.

Confirmed

What to watch

1. Check whether HALS utilisation rises toward management’s 55–60% target over coming quarters, since higher use of existing capacity could support sales without relying only on new projects. Analyst inference
2. Watch for commercial production of Performance Chemicals II in Q4FY27, the company’s stated expected start; delays could defer the growth contribution from this project. Proposed
3. Track whether higher phenol and acetone costs ease or can be passed on to customers, because continued cost pressure could further limit profit per sale. Analyst inference

Evidence

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