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