Chemicals Q3 Earnings Preview - Realisation Growth Likely To Aid Overall Performance: ICICI Direct
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ICICI Direct Report
Year 2021 was characterised by volatility in crude oil prices with oil moving up by 45% during the calendar year, in turn lifting chemical prices. Since the rise was uneven, there was a lag impact of passing on the entire input price inflation.
We witnessed major volatility in crude during Q3 with crude falling to $65/barrel and then again rebounding to $75-80/barrel by the end of quarter.
Since whole input inflation of H1 FY22 was not passed on entirely to end industries, Q3 can be a key quarter for passing on inflation given that crude had not surpassed this calendar year high. We expect our coverage universe companies to report topline growth of 19.2% YoY, largely driven by realisation growth.
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