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, reflecting a turnaround from prior losses.

• Specialty chemicals revenue grew 61% year-over-year, driven by new Paste PVC capacity and the Cuddalore facility, while 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 higher prices and lower feedstock costs.

• A new five-year LOI was signed with an agrochemical innovator, expanding the Custom Manufactured Chemicals pipeline and customer base.

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

Financial highlights

• Revenue from operations was INR 1,145 crore (up 15% YoY, up 9% QoQ); EBITDA was INR 124 crore (margin 11%).

• Net profit for the quarter was INR 24 crore, compared to a loss of INR 64 crore in Q1 FY24 and INR 31 crore loss in Q4 FY24.

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

• Liquidity remains strong with cash and bank balances around INR 800 crore; net debt is approximately INR 570 crore.

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

Outlook and guidance

• Custom Manufactured Chemicals expected to drive future growth, with phase two expansion set for commissioning by end of Q2 FY25 and a new INR 160 crore investment approved.

• Guidance for CMC revenue surpassing INR 1,000 crore by 2027, with the latest LOI adding INR 300 crore cumulative and INR 125 crore annualized revenue potential.

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

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

• Management and Board continue to review performance and resource allocation based on segment analysis.