Buy Chemplast Sanmar; target of Rs 470: ICICI Securities

ICICI Securities's research report on Chemplast Sanmar

Chemplast Sanmar (CSL) has been enduring challenges over the past two years due to a weak cycle in PVC business; however, the expectation was that policy action should aid business recovery which may have been deferred. This may delay the potential immediate recovery in PVC business for CSL, and financial turnaround may be pushed. China continues to face demand softness in local market for PVC. We fear, in the absence of policy protection, PVC spreads may remain depressed. CSL plans to add total 14ktpa of R32 with investment of INR 2.5bn; major expansion in CMCD may get completed, helping net debt to peak out soon.

Outlook

We cut FY26/27E EBITDA by 12-14%, assuming lower PVC spreads. Our SoTP-based TP stands at INR 470 (vs. INR 515); retain multiples. Maintain BUY.