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Nirmal Bang Report
As per press reports, the European Parliament has recently approved the EU 7 norms (originally introduced in 2022) related to limiting vehicle emissions.
The actual implementation of these norms is not likely any time before the start of FY28 (initial expectation of FY26).
While the management has guided for strong growth in structural directing agents in FY25 (after two consecutive weak years), we believe that the EU 7 related incremental demand from USA and the Europe will be pushed further down the line and overall SDA growth might moderate post FY25 till FY27.
We believe that delay in scale-up of ex-SDA portfolio due to demand challenges, China dumping and lack of certainty on consistent growth in SDA might lead to consensus earnings downgrades over next two years.
Maintain Sell after roll forward of valuation to FY26E.
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