CHEMPLASTS - Chemplast Sanmar Limited Share Price

In the earnings conference call held on July 29, 2025, management provided an outlook indicating challenges due to pricing pressures and dumping activities impacting revenue and margins. For Q1 FY '26, Chemplast Sanmar Limited reported revenues of INR 1,100 crores and an EBITDA of INR 17 crores, with a net loss of INR 64 crores. The company highlighted ongoing anti-dumping investigations aimed at addressing the dumping of PVC products from regions like the EU and Japan, with anticipations that finalized decisions would soon yield protective duties beneficial for prices and margins.

Management noted a stable demand for Paste PVC, with approximately 40,000 to 45,000 metric tons consumed in India during the quarter. They indicated that their new Paste PVC plant has reached full operational capacity. The Custom Manufactured Chemicals Division is also expected to show growth, particularly in the agro-chemical sector.

A major forward-looking point discussed was the expected final findings from the anti-dumping investigation on Suspension PVC, which is anticipated to conclude by Q3. Preliminary duties indicated could range from $82 to $167 for China and $104 to $339 for the USA, with variable contribution margins currently between INR 5,000 and INR 7,000.

The management expressed confidence in the recovery trajectory, predicting ongoing demand increases due to infrastructure projects. They expect long-term growth from capacity expansions and new project completions, specifically mentioning the timely completion of Phase 3 of the multipurpose block, projected for Q3 FY '26. Overall market conditions, influenced by potential government interventions in China regarding capacity and pricing, were also cited as critical factors for future performance.

Question 1: "So first question is on the likelihood of the ADD on Suspension PVC. So in terms of spreads, what are the spreads that we are currently making? And once the ADD is in place based on the initial spending and initial rates, what is the likelihood of the spreads post ADD?"

Answer: "It's tough to specify exact numbers on ADD. We expect final findings soon, likely by early August. Preliminary duties were $82-$167 for China, and $104-$339 for the US, indicating potential spread improvements. Our current variable margin is INR5,000 to INR7,000. The ADD should positively affect this."

Question 2: "In terms of the project completions and our target of FY '27, are we completely on track?"

Answer: "Yes, project completion is on schedule. Phase 3 of our multipurpose block will be operational in the next 2 to 3 months, and we're also making progress on the upcoming production block. We're actively engaging with customers, and FY '27 targets remain achievable."

Question 3: "What is the current demand-supply outlook globally for PVC?"

Answer: "Globally, demand-supply remains stable. There's no significant recovery in China, though their government is addressing overcapacity issues, which may impact supply dynamics. Demand in India is strong with expectations of continued growth due to infrastructure projects."

Question 4: "Can you give a little more color on Paste PVC? What is happening with the anti-dumping measures?"

Answer: "The Paste PVC market in India is around 170,000 tons, with our capacity at 110,000 tons. Though duties were applied to some countries, dumping shifted to the EU. We've initiated anti-dumping investigations there, and we expect action before year-end."

Question 5: "So can you give some color on what is the currently our capacity utilization and our spread in Paste PVC as well as Suspension PVC?"

Answer: "Our capacity utilization is nearly 100%. The spread for Suspension PVC is INR5,000-$7,000 depending on stock levels, while for Paste PVC, it's around INR24,000-$25,000 per ton. The impact of anti-dumping duties is yet to be realized."

Question 6: "What are the expected cost savings from our renewable power projects?"

Answer: "Our green power initiatives cover approximately 35-40% of our energy requirements, anticipated to yield savings of INR50-60 crores over the contract duration, significantly lowering grid costs."

Question 7: "On the R32 project, what are the funding sources for capex?"

Answer: "The precise capex and funding structure for the R32 project will be determined once we finalize the project's sizing. Currently, we're focused only on enabling approvals."

Question 8: "How do you see the quota regime affecting production and consumption levels?"

Answer: "Quota allocation is based on 2009-10 HCFC production and future HFC projections. Our historical production gives us some entitlement, but we need to maintain production quota to meet demand successfully."

Feel free to ask if you need further information!