Chemicals & Petrochemicals share price target

Specialty chemicals has been a star sector for investors over the past 18 months. Companies in this space make chemicals like alkalis, isobutyl benzene, phenol, sulfonic acid, and other base and performance chemicals. Since the onset of the pandemic, this industry saw significant growth in FY21.

Solid Q1=Low base coupled with Healthy demand momentum in domestic/export market We expect the companies under our chemicals coverage to report solid revenue growth (65.1%YoY) in Q1FY22 with 141.8% growth in profitability, mainly led by restoration of demand in end -user industries and low base (covid-19 had posed challenges in Q1FY21). We expect higher double-digit volume growth for most companies under our universe. Increased freight costs due to severe disruptions on supply routes impacted imports (since the last few quarters), leading to 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 most of the...

Since the start of Q4FY21, crude oil prices have gone up by ~35%, which percolated to many chemicals prices to reach considerably higher levels. Since there has been a lag impact of passing on higher input cost to end users, we expect our universe companies to have able to pass on meaningful increase during this quarter and thereby assist sustainability/improvement in gross margins. In terms of volume growth, since there has been restoration of demand across construction, auto, textile along with sectors being resistant during pandemic such as pharma, agrochemical, FMCG, it should...

in speciality chemical segment and healthy growth in the pharma segment. With improved product mix and additional compensation income from the canceled contract, EBIDTA margin likely to improve by 404bps to 24.4% from 20.3% in Q4FY20. The net profit expected to grow by 85% at...

EBITDA to grow 33.9% YoY with bottomline up 41.9% YoY Increase in the value added segment revenue from the basket of specialty chemical companies along with a rise in realisation for select companies can aid the operational performance. We expect the OPM of our coverage universe companies to expand 280 bps YoY to 19.3%, leading to EBITDA growth of 33.9% YoY. Bottomline growth is expected to be up 41.9% YoY, largely on the back of lower tax outgo and higher other income....

EBITDA to grow 12.4% YoY with bottomline up 15.3% YoY Increase in the value added segment revenue from the basket of specialty chemical companies along with a rise in realisation for selected companies can aid the operational performance. We expect our coverage universe companies OPM to expand 30 bps YoY to 18.4%, leading to EBITDA growth of 12.4% YoY. Bottomline is expected to grow 15.3% YoY, largely on the...

We appreciate your support in the Asiamoney Brokers Poll 2020 After falling below $20/barrel in April'20, crude prices managed to cover some ground and hovered above $40/barrel in June'20, led by tightened supply from OPEC and supported by encouraging economic data from the US and China. OPEC's production in June'20 was cut to a three-decade low after Saudi Arabia reduced production by an additional 1mn bpd. This propelled some relief rally in various downstream products in the last two months. Gradual re-opening of economies helped bring demand back on track for ~60-70% of the chemical products. Although, some chemical prices still...

The Indian Chemical Industry is presently positioned in front of a set of developments that would result in strong growth opportunities in both the overseas and the domestic markets for Indian players

We have Rallis and Sumitomo Chemical in our crop protection chemical coverage basket. Acephate and Pendimethalin are key products in the Rallis portfolio while for Sumitomo Chemical it is Chlorpyriphos. Even if the above technical is banned for domestic market consumption, we do not expect the same to impact the earnings of both these companies adversely given that these technicals may not be sizeable compared to the domestic revenue pie of both players. They can still export those molecules. Thus, overall earnings should not be impacted. We believe there is a high probability that domestic...

toll on Chinese economy as well as Global economy. The deadly virus surfaced from a fish market of Wuhan city of Hubei province...