Chemicals & Petrochemicals share price target

R-22 price rose to Rs293/kg (9.4% QoQ / 52.7% YoY) in Q2FY23-TD, but volumes were down 33.4% YoY to 943te.

Rossari Biotech’s four key raw materials’ inflation remains elevated which has kept the company’s margins under pressure. However, in Apr’22, acetic acid prices dipped sharply, but other three products’ prices continue to rise. Pigment prices have increased marginally on QoQ basis, which shows continued pressure on margins for Sudarshan.

R-22 prices dipped slightly to Rs242/kg (down 5.8% QoQ / up 36.4%) in Q4FY22, but volumes were down 34% YoY to just 3.7kte, which suggests pressure on prices will continue. This means SRF’s ref-gas revenue and EBIT margin benefits are coming entirely from the HFC portfolio. Some volume impact is due to shutdown of Gujarat Fluorochemicals’ (GFL) plant, but we are not worried as companies sell their entire quota allocated for full year.

Better realization + Higher RM cost = Moderate earning growth in Q4 We expect the companies under our chemicals coverage to report strong revenue growth (25.3% YoY) mainly led by steady demand in end-user industries and higher realization (raw material price increase pass on). We expect moderate volume growth for most companies under our coverage universe. Due to severe disruptions on supply routes, increased freight costs continued to impact imports, resulting a jump in chemical prices in the domestic market. Behind the sharp increase in the Crude oil price (+59% YoY), the base chemicals like Benzene, Toluene, Xylene, Phenol etc. have also surged between 40-90% on a YoY basis. High input costs coupled with an abnormal increase in...