Fundamentals Remain Intact, Existing Trend to Continue: Revenue/EBITDA/PAT have grown by 8.6%/15.2%/15.7% to Rs.16.9bn/3.9bn/2.7bn(Vs Rs.15.6bn/3.4bn/2.3bn YoY), respectively on the back of 9.3% volume growth(domestic) in Q1FY17. The company's EBITDA margin rose by 410 bps QoQ and133 bps YoY due to softening in crude oil prices. Vinyl Acetate Monomer (VAM)is the key input of products which is co-related to crude oil price. Decline in rawmaterial prices by 4.2% YoY has resulted into, EBITDA improving by 15.2% YoY and 65.4% QoQ.Other Expenses/Sales has fallen by 8.5% QoQ because of no cost on advertisement incurred during Q1FY17. The company has reported net profit growth due to high EBITDA margin and high other income (up 72.9% YoY). The improvement in net profit margin by 97 bps YoY resulted into NPM of 16.0% in Q1FY17 Vs 15.0% in Q1FY16

Valuation and Outlook : Strong margin performance and near monopolistic position with ~70% and more than 50% market shares in flagships brands of Fevicol and Dr. Fixit, respectively, growth story of the company is intact. Besides, continuing product innovation, focus on special chemical business, brand building having hired Mr. Amitabh Bachchan as Brand Ambassador, make products premiumized. We value the company at P/E 48.0x to FY18E EPS which is currently trading at PE 40.1x of FY18E EPS and reiterate our “BUY” recommendation with target price of Rs. 840 representing potential upside of 20%