ICICIC Securities estimates its specialty chemical coverage universe’s revenue to grow 3.3% YoY in Q4FY23.

EBITDA is expected to grow 5.3% YoY; however, excluding Chemplast, we estimate growth to be  15% YoY:  SRF’s EBITDA to dip (-1.4%) YoY on lower margin in non-chemicals, while chemicals business to continue its good show; Navin Fluorine (+98%) to benefit from rise in utilisation of HPP plant and higher specialty / CRAMS revenue; Gujarat Fluorochemicals’ (52% YoY) growth to be led by a strong show in new fluoropolymers and ref-gas, and Clean Science (40% YoY) and EPL (+16% YoY) to benefit from lower input prices.

Tatva Chintan’s performance continues to be hurt by higher input cost, while SDA sales to recover. Galaxy Surfactants’ volumes to grow but on low base, but EBITDA/kg may dip. Chemplast’s volumes to be stable; however, PVC spread is likely to recover, but still below mid cycle levels. PCBL’s volumes to grow on re-inventorisation and gross profit/kg to be stable. Sudarshan to continue facing volume pressure in pigment business on lower demand from plastics, but margins to recover partly.  Rossari EBITDA to grow moderately even on a low base. Archean to see subdued demand in bromine volume; realisation to hold.

SRF’s chemical business EBIT to grow 27% YoY / 13.6% QoQ to Rs6.4bn. SRF’s chemical business EBIT may gain from steady growth (YoY) in fluoro-specialty, and sustained high price in ref-gas (HFC). Technical textiles and packaging films’ EBIT is likely to be lower YoY on dip in spreads; however, we anticipate some recovery QoQ. SRF’s revenue to grow 4.8% YoY / 7.2% QoQ to Rs37bn, EBITDA to decline 1.4% YoY / up 12.1% QoQ to Rs9.3bn. Net profit to decline 9.7% YoY / up 7.1% QoQ to Rs5.5bn.

Navin Fluorine’s EBITDA to rise 98% YoY to Rs1.9bn. Revenue to grow 56% YoY to Rs6.4bn. This would be aided by 84% YoY growth in HPP (which also includes ref-gas and inorganic fluoride) to Rs2.8bn on commissioning of intermediate product for Honeywell. Specialty chemicals revenue to grow 50% to Rs2.4bn on full quarter benefit of MPP-2 and dedicated agro-chemical intermediate plant; and CRAMS revenue to grow 40%. EBITDA margin may rise 160bps QoQ on operating leverage. EBITDA / PAT may grow 98% / 52% YoY to Rs1.9bn / Rs1.1bn, respectively.

Gujarat Fluorochemicals’ EBITDA may rise 52% YoY to Rs5bn. Bulk commodity revenues are likely to dip 18% YoY due to fall in caustic soda and chloromethane prices. Fluorochemicals revenue to benefit from ramp-up in R-125. Fluoropolymers revenue to benefit from higher realisation in PTFE; and volume ramp-up in new fluoropolymers. Revenue to grow 34% YoY to Rs14bn. Gross profit margin may dip 230bps QoQ to 70.2% on lower bulk commodity revenue. EBITDA margin to be at 35% (down 190bps QoQ). Net profit may rise 50% YoY / up 1.1% QoQ to Rs3.3bn.

Clean Science’s net profit to grow 33% YoY / flattish QoQ to Rs832mn. We expect Clean Science’s revenue to grow across segments YoY on new capacity addition. Gross profit margin is expected to rise 20bps QoQ to 67.4% aided by drop in key raw material prices. Company’s EBITDA is likely to jump 40% YoY / 8.4% QoQ to Rs1.2bn, and EBITDA margin to be 45.1% (down 50bps QoQ).

Tatva Chintan’s EBITDA to dip 7.8% YoY / +13% QoQ to Rs202mn. Revenue from SDA to recover as customer inventory level normalise; up 60% YoY to Rs617mn. PTC, electronic chemicals and PASC to grow at a healthy pace. Gross profit to grow 3% (up 14.6% YoY) to Rs605mn, which continues to hurt by high priced solvent. EBITDA margin is likely to remain subdued at 15.3% (up 40bps QoQ). Net profit to dip 31.8% to Rs119mn. 

Galaxy Surfactants’ volumes to grow 6.2% YoY to 61kte on low base. India should see a steady volume performance; AMET and RoW to see improvement in demand, though on low base. Performance surfactants volumes to rise 10% YoY; specialty care volumes to be flattish. Realisation may dip on a drop in raw-material prices. Thus, revenue to dip 8.3% QoQ and 6% YoY to Rs10bn. Gross profit margin to improve 50bps QoQ (optically on lower raw material cost), while EBITDA margin may rise 120bps QoQ. EBITDA /kg to remain healthy at Rs21.2 (down 20% QoQ); and EBITDA to decline 10.9% YoY / 16.1% QoQ to Rs1.3bn. Net profit to decline 18% YoY / 24% QoQ to Rs804mn. GSL benefited from export incentive of Rs200mn in Egypt in Q3FY23 which we assume nil in Q4FY23.

Rossari’s net profit to grow 12.8% YoY / 5.8% QoQ to Rs272mn. Rossari’s consolidated revenue is expected to dip 9.3% YoY / up 2.2% QoQ to Rs4bn. HPPC segment revenue to dip 7.1% YoY (up 4% QoQ) to Rs2.8bn. Textile business is likely to have muted revenue due to headwinds for the industry. EBITDA to grow 6.8% YoY to Rs558mn which should benefit from decline in raw material prices and EBITDA margin may improve by 10bps QoQ to 14%.

EPL’s EBITDA to rise 16% YoY to Rs1.5bn. Revenue is likely to grow 8% YoY to Rs9.5bn. Revenue growth to come across geographies, except Europe (flattish) –  AMESA (+10% YoY), Americas (+12%) and EAP (+15%). Gross profit may be up 9.7% YoY to Rs5.2bn and EBITDA to grow 16% YoY to Rs1.5bn. Net profit to grow 8.6% YoY to Rs529mn. We expect EBIT margin improvement sequentially across segments from lower raw-material prices and cost inflation.

Sudarshan Chemical’s EBITDA to dip 19% YoY. Revenue is expected to dip 2.6% YoY / +15.7% QoQ to Rs6.1bn. Gross profit margin may improve 60bps QoQ to 41.4% on easing raw material inflation and EBITDA margin may improve by 350bps to 11.4%. We expect net profit to dip 52% YoY to Rs214mn.

Chemplast Sanmar’s EBITDA to dip 56% YoY to Rs1.5mn. Volumes are likely to be flattish YoY at 151kte. Revenue is estimated to dip 33% YoY to Rs12bn on lower realisation. PVC spread is expected to improve from lows of previous two quarters, but we believe it is still below mid cycle spreads which should take a few more quarters. Drop in caustic soda and chloromethane prices will likely hurt standalone profits which may off-set benefit of price increase in paste-PVC. Gross profit may be lower by 23% YoY to Rs4.6bn. Net profit to contract 70% YoY to Rs703mn.

PCBL’s EBITDA to rise 35% YoY / 11.3% QoQ to Rs1.8bn. Volumes to rise 6% YoY to 119kte on re-inventorisation. Realisation to be lower QoQ on a drop in input cost while spreads are stable. Gross profit/kg to improve 12.5% YoY (flattish QoQ) to Rs31.5. Net profit to increase 14% YoY to Rs1bn.

Archean Chemical EBITDA to rise 5.1% YoY to Rs1.7bn. Archean Chemical revenue to grow 2.3% YoY to Rs3.8bn driven by better realisation in salt and bromine; while volumes remain subdued, particularly in bromine, as demand from China is below expectation. Salt realisation is expected to remain strong which is helping company to sustain EBITDA growth. Net profit to grow 46% YoY to Rs1.2bn on interest cost saving from repayment of high cost NDCs from IPO proceeds.

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