ICICI Direct Initiates Coverage on Rossari Biotech with Buy Rating, Targets Rs 570

Rossari Biotech Outlines Focus Areas for FY27, Guides for 15% Revenue Growth

Rossari Biotech, a leading player in the chemical and pharmaceutical industry, has outlined its focus areas for the fiscal year 2027 (FY27) in its latest research report by ICICI Direct. The company reported a 11.2% year-on-year (YoY) growth in its earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fourth quarter of FY26 (Q4FY26), however, saw a decline in its gross and EBITDA margins on a quarter-on-quarter (QoQ) basis due to an inferior product mix.

Rossari has identified three key focus areas for FY27. Firstly, the company aims to grow profitably by improving sales in the high-margin categories of pharmaceuticals, aroma, and personal care, in addition to exiting its low-margin business-to-consumer (B2C) segment. Secondly, Rossari is working on cost-optimization measures to enhance its operational efficiency. Thirdly, the company has recalibrated its capital expenditure (capex) plan and is focusing on ramping up its existing capacity.

The company has also outlined its plans to exit non-core assets and become debt-free within the next 18 months. This strategic shift is expected to have a positive impact on Rossari's financials and operational performance.

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Outlook and Recommendations

Rossari Biotech has guided for a 15% revenue growth in FY27, with an expected EBITDA margin of 12-13%. ICICI Direct has revised its earnings per share (EPS) estimates for FY27 and FY28, reducing them by 3% each. The research firm has also revised its target price (TP) for Rossari Biotech to INR 570, with a revised price-to-earnings (P/E) multiple of 16x (vs. 18x FY28 EPS). ICICI Direct retains its 'BUY' recommendation for the stock.