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ICICI Securities Report
Chemplast Sanmar Ltd.’s Q4 FY22 spreads were impacted by high-cost inventory carried over from Q3 FY22 and sold in its entirety in Q4 FY22. This kept Ebitda flattish QoQ.
Chemplast Sanmar has sold most capacity in FY22, and in FY23 it has only 10% more capacity coming in suspension-polyvinyl chloride segment. Large expansion in paste-PVC and custom manufacturing will commence only in FY24.
Company plans to do more capex with good scope for large free cash flow generation and has not announced dividend in FY22 pending assessment of fund requirement.
We expect big capacity announcement in SPVC where the company already has environmental clearance to double its capacity to 600 kilo tonnes per annum.
This will provide the much-required visibility on volume growth while more capex in custom manufacturing will be welcome.
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