We expect the companies under our chemicals coverage to report strong revenue growth (25.9% YoY) mainly led by restoration of demand in end-user industries, base effect and higher realization (raw material price increase pass on). We expect double-digit volume growth for most companies under our universe. Increased freight costs due to severe disruptions on supply routes continued to impact imports, resulting in a surge in selective chemical prices in the domestic market. The growth trajectory from the export market looks promising with the commissioning of new capacity for selective players. We believe that most chemical companies have ramped up their utilization levels, resulting in margin normalization. Overall, our Chemical coverage would post a Revenue/EBITDA/PAT growth of 25.9%/14.2%/14.1% YoY in Q3FY22. We expect the EBITDA margin of our coverage universe to contract by 187bps YoY, owing to elevated input costs, freight and power costs....
Fermenta bio expected to report revenue growth of 4.6% YoY to INR 941mn, despite of continued traction in the Human VD3 business (80% of overall VD3 sales H1FY22) due to planed shutdown for capacity expansion. However, owing to a high base, the EBITDA margin can contract by 887bps to...
IGPL also forayed into the downstream product by introducing speciality plasticizer DEP (Di-Ethyl Phthalate). The company commenced commercial production of DEP (in Nov 21) with a capacity of 8,400 MTPA with a 50% increasing possibility at a minimum Capex. Since the compound Relative Price Chart is a suitable solvent for many organic molecules, it is often used to bind cosmetics and fragrances (mainly incense sticks and attar). Domestic demand for DEP is 22,000 MTPA with almost the same in terms of supply. The company is planning to cross-sell this product to existing plasticizer clients since...
Granules (GIL) posted revenues of INR 8,883mn with 3.5% YoY growth, which was 5.2% above our estimate of INR 8,446mn. Revenue beat was mainly driven by new product launches and increased market share for existing products in the finished dosages (FD) segment. During Q2, FDs grew by 18% (YoY), PFIs grew by 10% (YoY), and API sales dropped by 25% (YoY). Gross margin contracted by 706bps on account of increase in KSM prices (mainly PAP and Acetic acid prices are up by 100%150%) and loss of MEIS benefit. However, EBITDA Margin witnessed a higher impact (decline of 1286bps to 17% in Q2FY22 ) due to lower profitability in Para products and higher logistic cost and R&D expenses (5.3% vs 2.6% in Q2FY21). The management expects to pass on some of the increases to their customers from Q3FY22 onwards. GIL reported a PAT of INR 807mn, which was below our estimate of INR 1237mn driven by weak operational performance. As per management, the...
estimates. The company has posted revenue of INR4,711mn with 21.6% YoY growth which was 12.2% above our estimate of INR 4,198mn. Revenue beat was mainly driven by optimum utilization of PA4 and a sharp increase in the MA realization. Despite increased contribution from high margin product (MA), gross margin witnessed 449bps contraction on QoQ basis, and 167 bps decline on YoY basis due to contraction in PAN/OX spread. EBITDA surged by 133% YoY to INR 975mn (est INR...
Sequent Scientific (SSL) has posted revenue of INR 3,506mn with a 1.2% YoY increase, which was 13% above our estimate of INR 3,102mn. The revenue beat was mainly driven by higher than expected growth in formulation business; However, API business de-grew by 10.4% (YoY) due to lower offtake of Albendazole (key product in API). The formulation business grew by 6.1% (YoY), led by strong performance in LATAM (+34.5% YoY) and Europe (+10.3%). India business growth moderated (+4.2%) due to the base effect of Zoetis commercialization in Q2FY21. Currency depreciation overshadows double-digit growth in Turkey business (de-grew by 6.6% YoY). Revenue from Emerging markets declined by 23.4%. Management expects a strong recovery in the API business during the second half of the year. EBITDA margin witnessed a sharp contraction of 1067bps to 5.6% level (lowest in last four years), which was 632bps lower than our estimate due to negative operating leverage in API business and higher employee cost (due to ESOP). Despite income tax credit (tax rate 250% vs 20.7% in Q2FY21), reported PAT came at INR 143mn (-52.8% YoY) compared to our expectation of INR.159mn due to operationally weak performance. Management maintained revenue...
Transpek Industry Limited (TIL) has posted revenue of INR 1,217mn with a 63% YoY increase, which was 4.3% above our estimate of INR 1,167mn. The revenue growth was mainly driven by strong volume recovery in key products as higher off-take from MNC customers. EBITDA margin for the quarter stood at 14.8% lower than our estimate of 18.4% (EBITDA margin of 18.2% in Q4FY21, 11.9% in Q1FY21) due to an increase in key raw material costs along with higher freight cost. However, the management is confident of improving the margin profile from the current level (guided 16-20%) on the back of demand recovery in end-user industries and new product launches in the high margin category. TIL reported a PAT of INR 135mn compared to our estimate of INR122mn...
Fine Organic Industries (FOIL) posted revenue of INR 3,576mn with a 49% YoY increase, which was 5.6% above our estimate of INR 3,387mn. The revenue growth was mainly driven by better realization supported by the price increase and partially due to new product introduction. Export volume grew at a better pace with a contribution of 62% compared to 55% in Q1FY21. However, domestic sales did not pick up and remained flat during the quarter due to the lockdown restrictions. FOIL has witnessed a increase in key raw material costs along with higher freight cost. Despite taking price increase by re -negotiation with some of its customers, continued increasing input cost severely impacted its gross margins by 673bps (YoY), which resulted in 732bps (YoY) contraction in EBITDA margin to 14.5%...
