IGI Logo

About the Company

Chemplast Sanmar Ltd (CSL) is a part of the Sanmar Holdings Ltd, one of the oldest and most prominent corporate groups in the South India region. The company is a specialty chemicals manufacturer in India with a focus on specialty paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors. They have four manufacturing facilities, of which three are located in Tamil Nadu and one in Puducherry.

CSL is one of India’s leading manufacturers of specialty paste PVC resin based on installed production capacity as of December 31, 2020. It is also the third-largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide in the South India region. Further, it is one of the oldest manufacturers in the chloromethane market in India.

Objects of the Issue

* Early redemption of NCDs issued by the company, in full;

* To achieve the benefits of listing of the equity shares on the stock exchanges;

* General corporate purposes;

Valuation

The demand for specialty paste PVC resin is expected to grow at a CAGR of 6-8% between FY2022-25 driven by government initiatives, lack of substitutes and rising demand from the leather footwear market. We believe high barriers to entry and limited competition are expected to benefit existing manufacturers of specialty paste PVC resin in India. In addition, the demand for custom manufacturing, caustic soda and suspension PVC resin is expected to grow at a CAGR of 12%, 4-5% and 7-8% between FY21-25 respectively.

We believe that CSL is well-positioned to benefit from the industry growth trends given its diversified product portfolio which diminishes the risk associated with any particular product, vertically integrated manufacturing facilities and strong parental support. Further, given the strong demand for its products, the company intends to increase production capacity. This will aid in generating higher revenue as well as de-bottlenecking, which would lead to better operating efficiencies. On the financial front, Its joint ventures and associate company are posting losses from last 3 years, which remains a concern. Nonetheless, we have a positive view on the company from long term perspective.

Key Risks:

i) Its joint ventures and associate company are posting losses from last 3 years.

ii) The company has high debt.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer http://ex.religareonline.com/disclaimer

SEBI Registration number is INZ000174330

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