Realisation growth, commissioning of new plants likely to aid overall performance- Chemicals Q2FY23 Preview
The I-direct Chemicals universe is likely to witness a decent quarter amid strong YoY growth in speciality chemicals and agro chemicals segments. Also, commissioning of project will strengthen revenue growth. Increase in Delta for fluorine products is expected to lead to sequential margin growth.
Healthier demand across end user industries is likely to influence growth in the speciality and agro chemicals segments. Depreciation of the rupee will have a slightly positive impact on gross profit level. Large order backlog and commissioning of projects is expected to lead to decent topline growth.
Opportunities emanating from China +1 theme continue to have a significant positive rub-off for most players directly or indirectly both in the export as well as domestic markets. During Q2, we expect our universe companies to maintain the same trend. Chemicals players (11 coverage companies) are expected to post robust growth of 31.6% YoY to Rs 15,572.6 crore on the back of 1) better volumes growth, 2) better price growth, which ultimately relates in better delta growth in products and 3) commissioning of new plants. On the EBITDA front, the universe is expected to post robust growth of 46%YoY to Rs 3445.2 crore as increase in key raw material prices and power and fuel cost is likely to get offset by better realisation and healthy product mix. On the companies front, Sumitomo Chemical, Neogen Chemical and Astec Lifesciences are our top picks.
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