Stocks to buy: Navin Fluorine, Chemplast Sanmar, SRF among top 5 chemical stock picks by ICICI Securities

livemint.com:

Also Read: PSU stocks: Valuation premiums likely to sustain, says MOSFL; SBI, GAIL among 5 preferred PSU stock picksICICI Securities’ stock picks in the chemical sector among direct beneficiaries are Navin Fluorine International, Chemplast Sanmar and SRF, and among indirect winners are Archean Chemical Industries and Tatva Chintan Pharma Chem.Here are top chemical stocks to buy:ICICI Securities has increased Navin Fluorine share price target to ₹4,135 from ₹3,960 earlier on slight increase in EPS by 1-4% over FY25-26E. The brokerage firm maintained its ‘Buy’ rating on Navin Fluorine shares and the stock remains its preferred pick in the agrochemicals intermediate segment.Chemplast Sanmar is next in our pecking order, and we have increased our EPS estimates by 2-9% over FY25-26E as we factor in slightly higher spreads for PVC business on rising regulatory aids, ICICI Securities said.

The brokerage firm has downgraded Chemplast Sanmar’s rating by a notch to ‘Add’ from ‘Buy’ earlier but increased the target price ₹665 from ₹555. It increased EV/ EBITDA multiple for customer manufacturing to 25x (from 22x) in-line with peers, and standalone EV/EBITDA to 10x (from 9x) and S-PVC EBITDA to 8x (from 7x) with improving outlook.

Also Read: Torrent Pharma, Sun Pharma preferred picks of Citi Research: Cipla axed, watchful on Aurobindo, Dr Reddy'sSRF had best execution in the past in agrochemicals intermediate, and the aggression on product development has been intact despite the downcycle, which is impressive. It is also likely to resume capex intensity in H2FY25, ICICI Securities said.

However, SRF has headwinds in one key product from Chinese competition, which is 20-21% of specialty chemicals revenue. The brokerage maintains its