At a Glance (50 words)
Atul Ltd has grown sales from ₹5,081 cr in FY22 to ₹5,583 cr in FY25, while PAT bounced from ₹605 cr to ₹499 cr (dip in FY24, recovery in FY25). ROCE fell from 18% to 13%, ROE hovers ~9%, and the stock trades at P/E ≈ 42 with a 0.36% yield—can Lalbhai’s legacy still dazzle today?
1️⃣ TL;DR: Quick Chemistry 🧪
- Sales growth: +10% TTM vs 6% CAGR over 5 years
- Profit drama: PAT down 15% in FY24, back up 54% in FY25
- Margins: OPM ~15% steady, but volatile across quarters
- Returns: ROCE 13%, ROE 9% (FY25)
- Balance sheet: Net-debt ≈ zero; working-capital days jumped 90 → 132
- Valuation: P/E 41.8, P/B 3.6, yields 0.36%
- Fair-Value: ₹4,200–₹5,300 (BV ₹1,902)
- Verdict: ★★★ business, ★ valuation, ★☆ legacy
2️⃣ Business Potion 🍶 — Ingredient Breakdown
| Segment | FY25 Mix | Key Products |
|---|---|---|
| Life Science Chemicals | 55% | Crop-protection, specialty agro-chemicals |
| Performance & Other Chemicals | 45% | Dyes, pigments, surfactants, resins |
| Model | B2B (90%), budding B2C launches | Industrial clients, select consumer brands |
| Geography | Global (60% exports) | Europe, Americas, Asia-Pacific |
| Edge | Backward integration in intermediates | “Make-in-Gujarat” cost advantage, Lalbhai pedigree |
Atul invented India’s first vat dyes, phosgene, 2,4-D acid and even tissue-culture date-palms — so “been-there-done-that” is literally etched in its DNA.
3️⃣ Five-Year Scorecard 📊
| ₹ cr / % | FY21 | FY22 | FY23 | FY24 | FY25 | 5-yr CAGR |
|---|---|---|---|---|---|---|
| Sales | 4,399 | 5,081 | 5,428 | 4,726 | 5,583 | 6% |
| Op Profit | 913 | 913 | 807 | 639 | 913 | 0% |
| OPM % | 21% | 18% | 15% | 14% | 16% | – |
| PAT | 605 | 507 | 324 | 499 | 499 | -4% |
| ROCE % | 19% | 15% | 9% | 13% | 13% | – |
| ROE % | 17% | 11% | 9% | 12% | 9% | – |
| WC Days | 83 | 69 | 70 | 77 | 132 | – |
Color Commentary 🎨: Sales posted a steady 6% five-year CAGR, but PAT’s roller-coaster (-36% in FY23, +54% in FY24) and stretched working-capital are red-flagging the balance sheet.
4️⃣ Key Managerial Crew 🧑💼
- Mr. Samveg Lalbhai – Managing Director & Chairman (since Dec 2000) atul.co.in
- Mr. B N Mohanan – Executive Director, heads Agri-services (Whole-time Director) portal.sesgovernance.com
- Mr. T R Gopi Kannan – Whole-time Director & CFO, finance guru since 2014 portal.sesgovernance.com
No flashy celebrity CEOs here—just a Lalbhai scion and two seasoned directors who’ve steered Atul through decade-plus tenures.
5️⃣ Green Flags ✅ vs Red Flags 🚩
✅ Green Flags
- Almost zero net debt → financial flexibility
- Backward integration → margin protection in volatile raw-material cycles
- Stable OPM ~15% → better than many commodity-chemical peers
- Consistent dividends: ~15% payout rate (₹25/sh recommended)
🚩 Red Flags
- Working-capital spike: 90 → 132 days; cash stuck in receivables & inventory
- ROCE slide: from 19% → 13% in five years
- Profit volatility: cyclicality in specialty & crop-care orders
- Rich valuation: P/E 42 & P/B 3.6 demand near-perfect execution
6️⃣ Peer Palette 🎨
| Company | P/E | P/B | ROE % | OPM % | WC Days |
|---|---|---|---|---|---|
| Atul Ltd | 41.8 | 3.6 | 9 | 16 | 132 |
| Pidilite Ind | 71.8 | 14.2 | 30 | 25 | 10 |
| Deepak Nitrite | 37.1 | 4.1 | 17 | 18 | 29 |
| Vinati Organics | 47.5 | 5.2 | 21 | 22 | 93 |
| Median Specialty Chem | 46 | 4.4 | 17 | 18 | 50 |
Compared to niche peers, Atul’s valuation sits at the high end—Dixon-style multiples without a Dixon-style turnaround.
7️⃣ Fair-Value Range 🎯
Using a P/B model where: Justified P/B=ROE–gr–g\text{Justified P/B} = \frac{\text{ROE} – g}{r – g}Justified P/B=r–gROE–g
- ROE: 9%
- g: 4–8% (shadow of legacy slow-growth)
- r: 12% (emerging-market equity)
- BV: ₹1,902
| Scenario | g | Justified P/B | FV (× BV ₹1,902) |
|---|---|---|---|
| Bear | 4% | (9–4)/(12–4)=0.625 | ₹1,190 |
| Base | 6% | (9–6)/(12–6)=0.50 | ₹950 |
| Bull | 8% | (9–8)/(12–8)=0.25 | ₹475 |
Fair-Value Range: ₹475 – ₹1,190
At ₹6,874, Atul is trading 5–14× above its intrinsic math—only Lalbhai nostalgia can justify such a premium.
🏁 EduInvesting Verdict
“Atul’s cash-rich temple of dyes and chemicals still hums quietly, but the boardroom prayer for working-capital cures and margin miracles goes unanswered. If you believe crop-care booms & B2C launches will bail out the Lalbhai legacy, pay the premium. Otherwise, let the lab rats test this one a cycle later.”
Tags: Atul Ltd, Lalbhai Group, specialty chemicals, 5-year recap, P/B valuation, EduInvesting, fair-value
✍️ Written by Prashant | 📅 22 June 2025
