Atul shares surge 4% after Emkay sees stock touching ₹8,500 on favourable valuations, risk-reward

Shares of chemicals company Atul Ltd. surged as much as 4% on Wednesday, April 23, after brokerage firm Emkay Global initiated coverage on the stock with a 'Buy' rating.

The brokerage ascribed a price target of ₹8,500 per share on the stock, which implies a potential upside of 41% from Tuesday's closing levels.

Atul has invested ₹

2,000 crore over FY22-24 toward capacity expansion in existing products like Liquid Epoxy Resin (50ktpa) and Caustic Soda (300tpd), and in the backward integration of some key products (MCA for 2,4 D).

These new capacities, along with ramp up in certain existing underutilised capacities, is expected to drive revenue potential of ₹2,500-3,000 crore for the next 2-3 years, purely from the volume growth perspective, Emkay wrote in its note.

The brokerage said that this would also lead to broad-based margin expansion led by backward integration and operating leverage.

Atul has been a conservative company historically, logging relatively low capex even with a deleveraged balance sheet. It is only over the last three years that it has clocked capex of ₹2,000 crore – the highest in the company’s history.

According to Emkay, Atul's relatively inexpensive valuation and strong earnings growth forecast, make it constructive on the company's growth potential over the next couple of years.

Emkay expects Atul's revenue, EBITDA, and profit to grow at annual rates of 15%, 30%, and 37% respectively from FY24 to FY27.

Shares of Atul Ltd. are trading 3.37% higher on Wednesday at ₹6,235.10. Despite today's gain, the stock is down 10% so far in 2025.

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