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Chemplast Sanmar - Large Expansion In Suspension-PVC Possible: ICICI Securities

Chemplast Sanmar - Large Expansion In Suspension-PVC Possible: ICICI Securities

<div class="paragraphs"><p> Hydrogen peroxide division of Chemplast. (Source: Company website)</p></div>
Hydrogen peroxide division of Chemplast. (Source: Company website)

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ICICI Securities Report

Though Chemplast Sanmar Ltd.’s Q2 FY22 Ebitda grew 49% YoY to Rs 3.5 billion, it does not capture the entire benefit of polyvinyl chloride price upcycle, which started in August 2021.

Further, the large price hike taken in October 2021 should also benefit the company in Q3 FY22.

We share management optimism on the strong PVC cycle sustaining for next few years with demand outgrowing supply, and restrictions on PVC manufacturing/expansion in China.

Chemplast has infrastructure to expand its suspension polyvinyl chloride capacity three times at Cuddalore plant and, at current prices, capex payback period has shrunk to just one year.

We expect the company to soon announce doubling of its S-PVC capacity, which should help improve the growth outlook significantly.

Click on the attachment to read the full report:

ICICI Securities Chemplast Q2FY22 Results Update.pdf

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