iStockICICI Securities has buy call on Chemplast Sanmar with a target price of Rs 725. The current market price of Chemplast Sanmar is Rs 455. Time period given by analyst is one year when Chemplast Sanmar Ltd. price can reach defined target.
Chemplast Sanmar Ltd., incorporated in the year 1985, is a Small Cap company (having a market cap of Rs 1187.55 Crore) operating in General sector.
Chemplast Sanmar Ltd. key Products/Revenue Segments include Sale of Products, Scrap, Export Incentives, Lease Rentals and Other Services for the year ending 31-Mar-2022.
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1427.05 Crore, down -21.40 % from last quarter Total Income of Rs 1815.70 Crore and up 46.48 % from last year same quarter Total Income of Rs 974.24 Crore. Company reported net profit after tax of Rs 40.59 Crore in latest quarter.
Investment Rationale
Chemplast Sanmar’s (Chemplast) Q1FY23 spreads were impacted by various factors including: 1) China dumping excess supply into India and other regions; 2) falling PVC / VCM prices pushing buyers to start destocking, which hurt volumes; and 3) sharp fall in prices and slower volume offtake leading to inventory write-downs. EBITDA dipped 44% QoQ (vs volume decline of 16%), which was exacerbated by higher power cost (coal). Considering that the company will record nil PVC spreads for almost half of Q2FY23, the brokerage can infer that full recovery in financials will be visible only in H2FY23. Chemplast has started construction of its custom manufacturing plant while that of the paste-PVC plant is progressing as planned and these plants should go on-stream in FY24. Chemplast is working on fresh capex for existing products and expansion into new products as well. It slashes FY23E EPS by 60% on a tough H1FY23 while it cuts FY24E EPS by only 9%. Its revised target price is Rs725 (earlier: Rs800) valuing the stock at 18x FY24E EPS.
Promoter/FII Holdings
Promoters held 54.99 per cent stake in the company as of 30-Jun-2022, while FIIs owned 10.82 per cent, DIIs 24.72 per cent.
Chemplast Sanmar Ltd., incorporated in the year 1985, is a Small Cap company (having a market cap of Rs 1187.55 Crore) operating in General sector.
Chemplast Sanmar Ltd. key Products/Revenue Segments include Sale of Products, Scrap, Export Incentives, Lease Rentals and Other Services for the year ending 31-Mar-2022.
Financials
For the quarter ended 30-06-2022, the company reported a Consolidated Total Income of Rs 1427.05 Crore, down -21.40 % from last quarter Total Income of Rs 1815.70 Crore and up 46.48 % from last year same quarter Total Income of Rs 974.24 Crore. Company reported net profit after tax of Rs 40.59 Crore in latest quarter.
Investment Rationale
Chemplast Sanmar’s (Chemplast) Q1FY23 spreads were impacted by various factors including: 1) China dumping excess supply into India and other regions; 2) falling PVC / VCM prices pushing buyers to start destocking, which hurt volumes; and 3) sharp fall in prices and slower volume offtake leading to inventory write-downs. EBITDA dipped 44% QoQ (vs volume decline of 16%), which was exacerbated by higher power cost (coal). Considering that the company will record nil PVC spreads for almost half of Q2FY23, the brokerage can infer that full recovery in financials will be visible only in H2FY23. Chemplast has started construction of its custom manufacturing plant while that of the paste-PVC plant is progressing as planned and these plants should go on-stream in FY24. Chemplast is working on fresh capex for existing products and expansion into new products as well. It slashes FY23E EPS by 60% on a tough H1FY23 while it cuts FY24E EPS by only 9%. Its revised target price is Rs725 (earlier: Rs800) valuing the stock at 18x FY24E EPS.
Promoter/FII Holdings
Promoters held 54.99 per cent stake in the company as of 30-Jun-2022, while FIIs owned 10.82 per cent, DIIs 24.72 per cent.
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Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.
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