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Nirmal Bang Report
Camlin Fine Sciences Ltd.'s Q3 FY23 Ebitda came in 11% below our estimate mainly on account of lower revenue growth due to correction in raw material prices, shutdown in Europe Diphenol facility for three weeks, signs of global slowdown and de-stocking at customers' end.
Sequential revenue decline of ~20% was mainly volume driven on account of the aforementioned headwinds. Gross margin improved both on YoY as well as QoQ basis.
Higher share of downstream products, gradual easing of energy cost pressure in Europe and subsidy received to the tune of Rs 156 million during the quarter led to gross margin expansion.
Commercial production of composite vanillin plant commenced in January 2023. The management expects ~50% capacity utilisation in FY24 and overall revenue potential at peak utilisation remains Rs 8 billion, assuming constant pricing of Vanillin.
It highlighted that while the industry growth is ~4%, there is no other capacity addition in Vanillin. Camlin Fine Sciences' margin profile should improve from FY24 as catechol direct sales (at loss) should fall post Vanillin commercialisation.
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