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ICICI Securities Report
Chemplast Sanmar Ltd.'s Q4 FY24 print was expected to be weak, owing to the PVC business continuing to struggle, start-up costs in the custom manufacturing business (new facility and products) and weak revenues from its existing portfolio.
The PVC business is poised to recover over the next few quarters, as spreads global normalise, and expects regulatory intervention to further aid spread for Indian producers.
The custom manufacturing business continues to show progress with the addition of a fourth LoI for new chemical entity AI in agrochemicals.
We cut our FY25E-26E Ebitda by 3-5%, but increase our SoTP-based target price to Rs 555 (versus Rs 550); as we increase Custom manufacturing's FY26E enterprise value/Ebitda multiple to 22 times (from 20 times); and standalone EV/Ebitda multiple to nine times (from eight times). Maintain Buy.
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