Chemical Sector Q3 Results Preview - Some Cooling Off Imminent; Growth To Be Case Specific: ICICI Direct

ICICI Direct Report

For Q3 FY23E, we anticipate a mixed picture for the our chemicals universe on the back of a contrasting demand environment across end user industries.

While agrochem, pharma and some specific specialty chemicals players are likely to maintain their growth tempo, we expect a slowdown among packaging, pigments, dyes and polymer players. Moreover, prices of crude oil came off by ~11% over the course of quarter, which, in turn, may soften the cost of chemicals.

We expect our coverage universe companies to report topline growth of 9.2% YoY. On the Ebitda front, we expect higher coal prices and a muted business environment in Europe (acting against price hikes) to continue to weigh in the quarter.

We expect Ebitda margins of our coverage universe to decline YoY to down 4.1%. Bottomline for our coverage universe is expected to report de-growth of 11.8% YoY.

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