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Specialty Chemicals company Chemplast Sanmar announced Q2FY24 results:
Financial Performance:
- Revenue from Operations for Q2FY24 amounted to Rs 988 crore, a decrease of 17% YoY.
- EBITDA for Q2FY24 was Rs 46 crore, with an EBITDA margin of 5%.
- PAT for Q2FY24 was Rs 26 crore, with a PAT margin of 3%.
Pricing and Demand:
- Prices of both Suspension and Paste PVC were marginally higher in Q2FY24 on a QoQ basis. Prices were 2.5% to 5% higher sequentially.
- Caustic Soda and Chloromethanes prices witnessed further correction in Q2FY24 compared to Q1FY24.
- Imports of both Suspension and Paste PVC saw an increasing trend towards the end of Q2, resulting in some correction in prices in October.
- Demand for PVC products remains strong, especially in the infrastructure and real estate sectors.
Other Chemicals Business:
- The Other Chemicals business (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Refrigerant gases) experienced pricing pressures due to weak demand and excess supply in the Indian market.
- Some signs of price recovery were observed towards the end of October.
Projects Update:
- CMC Phase 1 was commissioned by the end of September 2023 and is being ramped up.
- CMC Phase 2 is on track for completion by the end of FY24.
- The paste PVC project is on track for commissioning in Q3FY24.
Commenting on the results, Ramkumar Shankar, Managing Director, said, “Following a tepid Q1FY24, Q2FY24 witnessed a relatively better performance mainly due to improvement in prices of both Suspension and Paste PVC coupled with lower feedstock prices. The top line was flat while EBITDA was back in the black during the quarter. However, the imports of both Suspension and Paste PVC witnessed an increasing trend towards the end of Q2 with heavy arrivals from China. This trend has spilled over to Q3 as well, resulting in some correction in prices in October. We expect the PVC margins to be under pressure in Q3.
The demand outlook for our PVC products, however, remains strong with a boom in the infrastructure and real estate sectors. We expect the recovery in prices and margins to be gradual over the next 2-3 quarters.
The Other Chemicals (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Refrigerant gases) business continued to witness pricing pressures during the quarter due to weak demand, excess supply situation in India due to recent capacity additions, and the global slowdown. There are some initial signs of recovery in prices towards the end of October.
The inquiries for our Custom Manufactured Chemicals Division’s business continue to remain robust. To effectively address the growing demand, we continue to enhance our capabilities. With the recent signing of the third LOI with a global agrochemical innovator for an Active Ingredient, we have strong visibility with respect to steady-state capacity utilization of the new production block and are on track to achieve Rs 1000 crore revenues in the next 3-4 years
While we face headwinds in the near term, the business prospects for our products continue to be strong in the medium to long term. With the projects on track for commissioning as per the slated timelines, we are confident of delivering a healthy performance in the future.”
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