Specialty Chemicals Q3 Results Preview - Subdued Demand Persists: Prabhudas Lilladher

Prabhudas Lilladher Report

After 17/26/37% YoY drop in revenue/Ebitda/profit after tax in Q2 FY24, on an aggregate basis, we expect our universe of specialty chemical companies to register another weak quarter with 18/34/45% YoY drop in revenue/Ebitda/profit after tax led by lack of demand and margin pressure.

As per our channel checks, while destocking appears to be broadly over, demand still remains elusive, raising possibility of sharper earning cuts for the chemical companies going forward, at least for another year.

Our recent note also delved upon China returning to capacity additions in chemicals, which spell trouble for Indian chemical companies.

While we remain apprehensive on most names, we still see upside, although limited, in Navin Fluorine International Ltd. and Vinati Organics Ltd.

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