IGI Logo

Realisation growth likely to aid overall performance...

Q1FY23 has seen an increase in crude prices to high single digits over Q4FY22, which, we believe, may have assisted most chemical companies to maintain the momentum of higher realisations growth. On the currency front, imports constitute ~25% of the I-Direct Chemicals Universe’s overall RM requirements while exports account for ~35% of overall revenue contribution. Thus, we expect just marginal positive impact of the ~3% rupee depreciation QoQ at the GP level. Furthermore, since we have witnessed a marginal reduction in freight cost, one can expect some relief on the operational front. In terms of topline growth outlook for Q1FY23E, we expect healthier demand environment across end user industries to have led strong revenue growth for our coverage universe, amid better volumes & realisations growth. We expect our coverage universe companies to report topline growth of 25.2% YoY. We expect OPM of our coverage universe at 21.3% (flat YoY) leading to EBITDA growth of 24.3%. The bottomline of our coverage universe is expected to report growth of 26.7% YoY led by higher other income and lower tax outgo.

Topline likely to grow 25.2% YoY, led by both volume, realisation

We witnessed a recovery in demand for sectors such as textile, paper, metals, automobiles, pharma, etc. This should support higher volume growth for most of our companies under universe especially from pigments, dyes, soda ash industries. Further, better realisations can aid overall performance. Companies in specialty chemicals have large order backlog in place. This is likely to sustain similar momentum as witnessed in the last quarter. We expect our chemical universe companies to post topline growth of 25.2% YoY for Q1FY23E.

EBITDA to grow at 24.3% YoY while bottomline at 26.7% YoY

Increase in the value added segment revenue from the basket of specialty chemical companies along with rise in the realisation for selected companies can sustain operational performance. We expect our coverage universe companies OPM to remain at 21.3% (-15 bps YoY), leading to EBITDA growth of 24.3% YoY. Bottomline growth may be aided by 26.7% YoY, largely on the back of lower tax outgo and higher other income.

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

SEBI Registration number INZ000183631

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer