Dolat Capital: Atul's Q1 Sales In-Line, Gross Margins Surprise Positively
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Dolat Capital: Atul's Q1 Sales In-Line, Gross Margins Surprise Positively

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Dolat Capital Report

Atul Ltd.’s Q1 reported in line sales of Rs 6.60 billion (our estimate Rs 6.70) down by 36.5% YoY. Gross margins expanded by 575 basis points YoY to 57.0%, which were significantly above our estimate of 51.0%. We believe, gross margins have largely expanded due to benign input costs. Ebitda (our estimate Rs 547 million) de-grew by 34.0% YoY to Rs 1.58 billion, with an Ebitda margin of 24.0%.

The company has controlled its other expenses and power and fuel costs, down by 38.3% YoY and 33.8% YoY respectively. Tax rate stood at 28.0% against 31.8% against Q1 FY21, profit after tax (our estimate Rs 223 million) de-grew by 20.1% YoY to Rs 1.17 billion. We were anticipating a much weaker quarter and believed FY21E to be a turbulent year due to volume de-growth, however benign input costs and controlled opex has kept Atul Ltd.s Q1 FY21 performance quite healthy.

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Dolat Research-Atul Q1FY21 Result Update.pdf

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