Chemplast Sanmar share price: Buy Chemplast Sanmar, target price Rs 800 : ICICI Securities

has a call to buy on Chemplast Sanmar with a target price of Rs 800. The current market price is Rs 523.95. The period given by the analyst is one year when . the price can reach the set target.

Sanmar Ltd., incorporated in 1985, is a small capitalization company (having a market capitalization of Rs 1187.55 Crore) operating in the general sector.

The main products/revenue segments of Chemplast Sanmar Ltd. include product sales, export incentives, scrap, rentals and other services for the year ending March 31, 2021.


For the quarter ended 31-03-2022, the company reported consolidated total revenue of Rs 1815.70 Crore, up 23.96% from last quarter, total revenue of Rs 1464.73 Crore and in up 34.45% from the same quarter last year, total revenue of Rs 1350.42 Crore. The company reported a net profit after tax of Rs 231.64 Crore last quarter.

Investment rationale
Chemplast Sanmar (Chemplast) spreads in Q4FY22 were impacted by high cost inventory carried over from Q3FY22 and sold in full in Q4FY22. This kept EBITDA stable quarter on quarter. Chemplast sold most of its capacity in FY22, and in FY23 it only has 10% more capacity in the S-PVC segment. The big expansion in pulp-PVC and custom manufacturing will not begin until FY24. The company plans to make more investments with good headroom for large FCF generation and no did not announce a dividend in FY22 pending assessment of funding needs. He expects a large capacity announcement in S-PVC where the company already has environmental clearance to double its capacity to 600kpta. This will provide much-needed visibility into volume growth, while more investment in custom manufacturing will be welcome. The brokerage tweaked the estimates slightly, but reduced the target price to Rs800 (from Rs910) by reducing the P/E multiple to 18x (from 20x) on weak near-term volume growth.

Promoter/Fii Holdings
The promoters held 54.99% of the company’s capital as of March 31, 2022, while the FIIs held 10.3% and the DIIs 25.21%.

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