Chemplast Sanmar Q2 Results Review - Corrective Measures In PVC May Help Normalise Spreads: ICICI Securities

ICICI Securities Report

Chemplast Sanmar Ltd.’s Q2 FY25 print was depressed due to pressure on PVC spreads despite anti dumping duty on paste-PVC; added with lower volumes in S-PVC (seasonality). DGFT has announced ADD on S-PVC as well, and BIS norms are expected to be implemented in Dec-24, which combined, should help Chemplast Sanmar stabilise its profits from the PVC business.

The sliver-lining for the PVC business is healthy domestic demand. Non-specialty prices have also started improving gradually, which should aid profitability.

Custom synthesis manufacturing business saw a healthy uptick, winning long-term contracts; execution in the next few quarters should help build a strong business. We cut our FY25E Ebitda by 39%, but only by 4% for FY26E. Our SoTP-based target price is revised to Rs 590 (versus Rs 615) with an unchanged enterprise value/ Ebitda multiple. Retain Buy.

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