ICICI Securities research report on Chemplast Sanmar
We met Ramkumar Shankar, MD and N. Muralidharan, CFO of Chemplast Sanmar. Takeaways: 1) Custom manufacturing (CM) had challenging FY24, but it expects significant ramp-up of new products, and MPP-3 in FY25. More capex in CM if it sells 60% of MPP-3 capacity. 2) PVC prices and spreads have been stable. This should drive improvement in profitability in coming quarters. Further, the company sees global supplies to be limited which should repair industry. It believes non-tariff and tariff barriers may come into effect which should protect domestic PVC producers.
Outlook
We have cut our EBITDA estimates by 15.6% for FY25E as we build gradual recovery across segments for Chemplast. We revise our SOTP-based TP to INR 550 (from INR 520) on rollover of valuations to FY26E. Maintain BUY.
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