Chemplast Sanmar (CHEMPLASTS) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 consolidated revenue reached INR 1,145 crore, up 15% year-over-year and 9% sequentially, with EBITDA at INR 124 crore and an 11% margin, marking a turnaround from prior losses.

• Speciality chemicals revenue grew 61% year-over-year, driven by higher volumes from new capacity and the Custom Manufactured Chemicals Division; value-added chemicals revenue rose 20% year-over-year.

• Suspension PVC revenue remained stable year-over-year and improved 8% sequentially, with profitability boosted by better prices and lower feedstock costs.

• Custom Manufactured Chemicals business saw demand recovery, signing a new five-year LOI with an agrochemical innovator, expanding its customer base and product pipeline.

• Un-audited standalone and consolidated financial results for the quarter ended 30 June 2024 were approved by the Board on 7 August 2024, with auditors issuing an unmodified limited review report.

Financial highlights

• Revenue from operations for Q1 FY25 was INR 1,145 crore, up from INR 996.41 crore in Q1 FY24 and INR 1,050.72 crore in Q4 FY24.

• EBITDA stood at INR 124 crore with an 11% margin; net profit was INR 24 crore, compared to losses in prior quarters.

• Gross margin improved from 31% to 40% quarter-over-quarter.

• Basic and diluted EPS (consolidated) for Q1 FY25 was INR 1.51, versus negative EPS in prior quarters.

• Liquidity remains strong with cash and bank balances around INR 800 crore; net debt at INR 560-570 crore.

Outlook and guidance

• Expectation to surpass INR 1,000 crore CMC revenue target by 2027 due to new capacity and orders.

• Phase two of CMC expansion to be commissioned by end of Q2 FY25; further expansion planned with INR 160 crore investment.

• Margins for Speciality Paste PVC and Suspension PVC expected to improve and sustain over the medium to long term due to global demand-supply tightness.

• Anticipate positive impact from anti-dumping duties on Paste and Suspension PVC later in the year.

• Short-term pressure on realisations for Caustic Soda, Chloromethanes, and Hydrogen Peroxide, with stabilization expected as demand grows.