Brokerage firm Axis Direct has issued a Buy rating for the company with a target price of Rs 760, citing record margin efficiency and growth in the pharma packaging segment. The report highlights strong performance in core segments like paints and FMCG, projecting continued margin expansion through FY27.
Axis Direct Initiates Buy on Company With Rs 760 Target
Target Price: Rs 760 | Current Market Price: Rs 691
Reader Takeaway: Margin efficiency and pharma segment expansion drive the positive outlook, despite raw material price fluctuations.
What just happened
Axis Direct has initiated coverage on the company with a "Buy" rating and a target price of Rs 760, implying an upside of approximately 10% from the recent market price. The brokerage firm notes the company's strong trajectory in operational efficiency, specifically citing a record EBITDA/kg of Rs 46.7 reported in Q1FY27.
Why this matters
The company has successfully consolidated its Hyderabad facilities into two integrated units, which has helped reduce logistics bottlenecks and wastage. This operational streamlining, coupled with a shift toward high-margin pharma packaging products, provides a strong base for earnings growth. Management has proactively increased its FY27 EBITDA/kg guidance to the Rs 44–45 range.
Key Drivers
- Pharma Packaging Growth: Recorded 39% volume growth in Q1FY27, with revenue expected to reach up to Rs 55 crore by fiscal year-end.
- Core Segment Strength: Paint segment sales grew by 11% to Rs 139 crore, while the Food & FMCG category saw a robust 26% year-on-year increase.
- Operating Leverage: Improved capacity utilization is expected to drive the Return on Equity (ROE) from 9% in FY26 to a projected 16% by FY28.
Risks to watch
While the outlook is positive, the brokerage notes that the Lubricants and Q-Pack segments have faced temporary raw material disruptions. Investors should monitor whether these supply chain challenges persist in Q2FY27 or if they are successfully mitigated.
Context Metrics
Financial projections indicate consistent growth in profitability, with estimated Net Profit rising from Rs 73 crore in FY26 to a forecast of Rs 146 crore by FY28. Earnings Per Share (EPS) is also expected to climb from Rs 22.0 to Rs 45.1 over the same period.
What to track next
Watch for updates on the full-year volume growth target of 10–12%. The market will be looking for signs of recovery in the Lubricants segment and sustained momentum in the high-growth pharma packaging division.