Chemplast Sanmar plans to do extra capex with good scope for big FCF technology and has not introduced dividend in FY22 pending evaluation of fund requirement. Brokerage ICICI Securities anticipate large capability announcement in S-PVC the place the corporate already has environmental clearance to double its capability to 600 kpta.
It will present the much-required visibility on quantity progress whereas extra capex in customized manufacturing will probably be welcome, as per the brokerage home. It has maintained Purchase ranking on the specialty chemical inventory with goal value of ₹800, implying a possible upside of about 55% from present stage.
The newly listed Chemplast Sanmar made its inventory market debut in August final yr. The corporate manufactures paste PVC, chloro-chemicals, caustic soda, hydrogen peroxide, and refrigerant gases, and in addition has a contract manufacturing phase.
“Chemplast Sanmar’s (Chemplast) Q4FY22 spreads have been impacted by high-cost stock carried over from Q3FY22 and bought in its entirety in Q4FY22. This saved EBITDA flattish QoQ. Chemplast has bought most capability in FY22, and in FY23 it has solely 10% extra capability coming in S-PVC phase. Giant enlargement in paste-PVC and customized manufacturing will begin solely in FY24,” ICICI Securities highlighted.
For FY22, the corporate stated customized manufacturing revenues have been up >50%, which may be very robust, and that enquires from shoppers have grown, it added. Although, “Chemplast has little or no headroom for quantity progress in FY23 (solely 10% capability addition in S-PVC is deliberate), as many of the new capability (in paste-PVC and customized manufacturing) will probably be added in FY24.”
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