The stock currently trades at 28.4xFY18e EPS of Rs 96.57 and 23.8x FY19e EPS of Rs 115.50. Growth in Atul's illustrious crop protection business (volume growth: 22% last fiscal) would come from deepening market penetration in Africa and South America and increasing its brand sales.
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Ostensibly, turnaround in its colors business would also spur earnings next fiscal (estimated to grow by 19.6%). MCA project with Akzo Nobel would gradually start to unfold next fiscal. On balance we retain our accumulate rating on the stock with target of Rs 3234 (previous target: Rs 3033) based on 28x FY19e earnings (forward peg: 1.4; currently at ~28x FY18e earnings) over a period of 6-9 months.
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