- EBITDA surged 34% YoY to INR1.5 bn, outpacing consensus.
- Margin jumped 200 bps to 25.0%, driven by lower power and fuel costs.
- Revenue CAGR of 26% projected through FY28, fueled by US‑EU trade deals.
- Motilal Oswal lifts FY26‑27 earnings estimates, maintains a BUY with ₹3,710 target.
- Valuation anchored at 26× FY28E EPS, implying ~30% upside from current price.
You missed Privi's 34% EBITDA jump—now the window is closing.
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Why Privi's Margin Expansion Beats Sector Trends
Privi posted a 25.0% EBITDA margin, 200 basis points above the analyst consensus of 23.1%. The uplift stems from a 50‑bp reduction in power & fuel costs and a 400‑bp cut in other operating expenses, reflecting tighter cost controls that many peers—such as Tata Chemicals and Gujarat Alkalies—still struggle to achieve. In a sector where average margins hover around 20%, Privi's ability to improve profitability while scaling production signals a competitive moat and operational discipline that can sustain higher cash conversion rates.
Impact of US‑EU Trade Deals on Privi's Growth Outlook
Recent trade agreements between the United States, the European Union and India have lowered tariffs on specialty chemicals, opening new export corridors for Privi’s high‑value products. The firm’s management projects a 46% CAGR in adjusted PAT through FY28, largely hinging on these “China + 1” diversification strategies. By reallocating capacity toward markets with higher price realization, Privi can capture margin‑rich demand while mitigating geopolitical supply risks that have plagued other Indian exporters.
Competitive Landscape: How Tata Chemicals and Adani Edge Ahead
While Privi accelerates capacity expansion, Tata Chemicals leverages its integrated petrochemical platform to achieve economies of scale, and Adani’s recent entry into specialty polymers adds downstream integration. Both giants are investing in green hydrogen‑based power to further slash fuel costs—a trend Privi is beginning to emulate. However, Privi’s niche focus on high‑performance additives gives it a pricing premium that larger conglomerates may find hard to replicate without significant R&D spend.
Historical Parallel: Past EBITDA Surges in Indian Specialty Chemicals
Looking back at the 2015‑2017 period, companies like Deepak Nitrite experienced a 30%+ EBITDA jump after securing long‑term supply contracts with European OEMs. Their shares rallied 70% before a corrective pullback once the contracts matured. The lesson: strong earnings growth can drive short‑term price appreciation, but investors must watch contract renewal risk and the sustainability of cost‑saving initiatives.
Valuation Mechanics: Decoding the 26× FY28E EPS Target
Motilal Oswal’s target price of ₹3,710 is based on a 26‑times FY28 forward earnings multiple. This multiple is modest relative to the sector’s historical average of 30×, reflecting a cautious stance on macro‑uncertainty. With projected FY28 EPS of roughly ₹143, the implied valuation offers a ~30% upside from the current market price of ₹2,850. The upside assumes Privi sustains its margin trajectory and capitalizes on the US‑EU trade tailwinds without major capex overruns.
Investor Playbook: Bull vs. Bear Cases
- Bull Case: Continued margin expansion, successful capture of US‑EU demand, and execution of capacity upgrades drive EPS above ₹150 by FY28, pushing the stock toward ₹4,200.
- Bear Case: Slower contract roll‑overs, unexpected input cost spikes, or regulatory delays in capacity expansion compress margins, limiting upside to below ₹3,200.