Chemplast Sanmar Ltd's reports significant drop in Q3FY24 revenue

Chemplast Sanmar Limited (NSE: CHEMPLASTS | BSE : 543336), a speciality chemicals company with a significant presence in the Custom Manufacturing business, the market leader in Speciality Paste PVC in India, and the 2nd largest producer of Suspension PVC in India (through its wholly-owned subsidiary), announced its unaudited Financial Results for the quarter/ nine months ended December 31, 2023.

Revenue Decline:

Revenue from Operations: Chemplast Sanmar reported a significant decline in revenue from operations, with Q3 FY '24 recording Rs. 888 crores compared to Rs. 1,189 crores in the same period last year, marking a 25% decrease. Sequentially, revenue dropped by 10% from Rs. 988 crores in Q2 FY '24. The cumulative revenue for the nine months ended FY '24 stood at Rs. 2,872 crores, reflecting a 24% decline compared to Rs. 3,794 crores in the corresponding period last year.

EBITDA and Profitability:

EBITDA: The company reported negative EBITDA of Rs. 7 crores in Q3 FY '24, compared to a positive EBITDA of Rs. 78 crores in Q3 FY '23. Sequentially, EBITDA remained stagnant at Rs. 46 crores in Q2 FY '24. For the nine months ended FY '24, EBITDA plummeted by 99% to Rs. 5 crores compared to Rs. 371 crores in the same period last year.

EBITDA Margin: EBITDA margin turned negative at (1%) in Q3 FY '24, contrasting with the 7% margin reported in Q3 FY '23. Sequentially, EBITDA margin remained flat at 0% in Q2 FY '24.

PAT: Chemplast Sanmar reported a net loss of Rs. 89 crores in Q3 FY '24, compared to a net profit of Rs. 27 crores in Q3 FY '23. Sequentially, the company registered a marginal net loss of Rs. 26 crores in Q2 FY '24. The cumulative net loss for the nine months ended FY '24 amounted to Rs. 127 crores, compared to a net profit of Rs. 106 crores in the same period last year.

PAT Margin: The PAT margin also witnessed a decline, turning negative at (10%) in Q3 FY '24, down from 2% in Q3 FY '23. Sequentially, PAT margin remained negative at (4%) in Q2 FY '24.

Commenting on the results, Mr. Ramkumar Shankar, Managing Director, said, "After a relatively better Q2 FY '24, Q3 FY '24 performance ran into heavy weather due to further correction in PVC prices on account of dumping from China and other countries, slow down in the Other Chemicals (Caustic Soda, Chloromethanes, Hydrogen Peroxide, Refrigerant gases) business due to the over-supply situation in India, increase in key feedstock (EDC and Ethylene) prices and adverse impact of the lag effect in correction of VCM prices.

However, the boom in the infrastructure and real estate sectors is driving the strong demand for PVC. We expect a gradual recovery in prices and margins over the next 2-3 quarters. The Other Chemicals business is also expected to witness improvement in prices in the next 3-4 quarters once the excess supply is absorbed by the market.

In our Custom Manufactured Chemicals Division's business, the pipeline is healthy. We commercialised 3 new products this year and a number of products are under various stages of development. Despite the challenges on account of the downturn in the global agrochemicals industry and the consequent inventory rationalisation, we expect this business to deliver a reasonable growth during the year. While commercial production from Phase 1 of the expansion project has commenced, Phase 2 is expected to be completed in Q1 FY '25.

The 41 ktpa Paste PVC project is expected to start commercial production in Q4 FY '24. This will further cement our position as the leading Paste PVC producer in India. Despite the recent uncertainty in the industry, we are confident of the long term potential of all our businesses and are strengthening our capabilities and relationships to grow in a sustainable manner."

Shares of Chemplast Sanmar Ltd was last trading in BSE at Rs. 456.10 as compared to the previous close of Rs. 469.45. The total number of shares traded during the day was 9578 in over 949 trades.

The stock hit an intraday high of Rs. 479.90 and intraday low of 452.00. The net turnover during the day was Rs. 4432231.00.

Source : Equity Bulls

Keywords

ChemplastSanmar INE488A01050 SpecialtyChemicals Q3FY24 9MFY24 ResultUpdate