Chemicals & Petrochemicals share price target

1) SRF: R-22 prices rose to Rs349/kg (+4.2% QoQ) in Q4FY23; volumes were up 10.2% YoY to 4.1kte. In packaging films segment, spreads contracted QoQ for both BOPET and BOPP, which put pressure on SRF’s packaging films margin in Q4FY23. 2) Gujarat Fluorochemicals: PTFE prices jumped 2.6% QoQ / 11.5% YoY to Rs1,050 while volumes fell 20.9% YoY to 2.8kte.

1) SRF: R-22 price rose to Rs345/kg (+3.1% QoQ) in Q4FY23-TD; volumes were up 4.2% YoY to 1.9kte. In packaging films segment, spreads contracted QoQ for both BOPET and BOPP, which will put pressure on SRF’s packaging films margin. 2) Gujarat Fluorochemicals: PTFE price jumped 2.7% QoQ / 11.6% YoY to Rs1,051 while volumes fell 23.7% YoY to 1.9kte.

In Q4FY23, we anticipate mixed performance from the speciality chemical industry. We expect 15.4% Y0Y/11.46% QoQ revenue growth for the chemicals companies under our coverage universe. Growth for the sector will be supported by improvements in realisations and a recovery in volume.

We estimate our specialty chemical coverage universe’s revenue to grow 3.3% YoY in Q4FY23. EBITDA is expected to grow 5.3% YoY; however, excluding Chemplast, we estimate growth to be 15% YoY.