Buy Advanced Enzyme Technologies Ltd For Target Rs.477 - Choice Broking
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Advanced Enzyme Technologies Ltd. (AETL) the largest Indian enzyme company had released its Q1 FY22 results which were in line with our estimates. Revenue in Q1 FY22 stood at Rs. 137cr, up 2.9% sequentially. Rating Te EBITDA came in at Rs. 62.8cr with a margin of 45.84%. PAT margin expanded sequentially by 375 bps due to high depreciation on account of new acquisition.
The human nutrition segment continued its positive streak and grew by 3% Face value Rs. 2 to Rs89.2cr in Q1 FY22 as compared to Rs86.8cr in Q1 FY21. The Animal Mar. Cap. Rs. 4,270 cr nutrition segment showed a significant improvement and grew by 32% YoY Category Small- Cap to Rs14cr. The Industrial Bio- processing segment grew by 56% YoY and 3% sector Chemicals QoQ and stood at Rs.20.4cr.
Specialized Manufacturing segment which is a new revenue stream, contributed 13.4cr to the revenue during the quarter. Domestic sales grew by 11% YoY to stand at Rs.57.9cr during this quarter while the international sales grew by 35% YoY and stood at Rs.79.1cr.
Successful integration of acquisition:
AETL added a new revenue stream, Specialized Manufacturing, as synergy Relative Capital Market Strength from the acquisition of SciTech Specialties which contributed 10% to the revenue. These products have extended AETL’s solutions in Nutraceutical, 00 Pharmaceutical, Bakery, Washing solutions and other Speciality products. Apart from this, their strong gross margins, reflect operational efficiency 200 and robust manufacturing and distribution systems.
Expansion in B2C segment to spur revenue:
The company has sustained revenue growth and has maintained EBITDA 150 - margin at over 40% for the past 9 years. After the success of their B2C segment in USA, the company is replicating the same business model in —i99 India. They will sell Human Nutrition and Nutraceutical products through their accelerate own the online revenue platform growth.
Outlook & Valuation:
Going forward, focus on biocatalyst and probiotic area, favorable sales mix and expansion in B2C segment in India will enable the company to maintain the revenue growth rate. Raw material cost pressure continued Particulars FY20 FY21 FY22E FY23E in Q1FY21 and is expected to sustain throughout FY22. EBITDA margin is expected to be in the range of 43-46%. We value AETL at a P/E multiple of 29x to its FY23E earnings and maintain BUY rating for the stock with a EBITDA 203.1 232.5 249.2 289.8 revised target price of Rs. 477 (previously Rs.486).
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