Specialty Chemical Q4 Results Preview: Sustained Pricing Pressure To Weigh On Margin Recovery, Says DRChoksey

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DRChoksey Report

In Q4 FY25E, we expect double-digit YoY revenue growth from the specialty chemical companies in our coverage. The revenue is expected to grow 24.8% YoY (+29.0% QoQ) driven by strong volume growth, capacity additions and reducing dependency on the agrochemical sector.

We expect positive YoY revenue growth from the entire coverage companies (barring Balaji Amines). Notable companies are Ami Organics (strong growth in the Advanced Intermediates segment), Navin Fluorine (new capacities coming in from R32 and Specialty Chemicals) and Anupam Rasayan (driven by strong growth in the pharma and polymer segments).

Ebitda is expected to grow at a similar pace to revenue growth at 27.0% YoY (+28.0% QoQ). Ebitda margins are expected to expand 32 bps YoY (-14 bps QoQ) due to an unfavorable product mix, pricing pressure and weak realization.

Ebitda margin is expected to contract for half of the coverage companies, where Balaji Amines and Tatva Chintan are expected to post weak margin growth among our coverage due to persistent market headwinds impacting pricing and continued struggle in the SDA segment, respectively.

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