Special chemical companies are expected to report strong revenue growth in the quarter ended in March, assisted by better realization and the volume of the company, said analyst surveyed by MoneyControl.
This sector continued to see strong demand during the quarter because the global economy recovered from persistent locking impacts despite the spread of the Omicron variant of Covid-19 at the beginning of the quarter raises some concerns.
While input prices for special chemical companies soaring in this quarter because of higher global crude prices, analysts suggest that most companies can continue higher costs to customers, given their dominant market position in certain products.
Krchoksey’s stock brokerage and securities companies expect a stock of chemicals covered by him to report 28.4 percent of income growth in revenue in the reporting quarter led by better volume growth and price increases.
“As long as the Q4FY22 rebound in demand for the main end user industry will act as an important factor for our chemical universe companies to provide higher volume growth,” Krchoksey shares said in the preview record.
Shardran broker companies expect a special chemical company’s net profit to grow more than 20 percent in the March quarter which reflects the capacity of many companies to provide higher input costs.
“Strong demand environment, the potential benefits of global market share, and the capex plan (to expand capacity) gives trust in the outlook for long-term medium-term growth for the special chemical sector of India despite short-term challenges at high costs,” Satekhan said.
However, some pressure on the margin of a special chemical company will be proven in the year considering a surge of more than 36 percent on crude oil yarn in the March quarter due to the breakout of war between Ukraine and Russia.
The prospect of margins for special chemical companies remained uncertain by investment banks Deutsche Bank expect global crude oil prices to remain around $ 110 per barrel for the rest of the year if the Ukrainian-Russian crisis extends.
In addition to higher oil prices, special chemical companies have faced a shortage of tankers and shipments for their exports that have increased shipping costs for the company. Furthermore, estimates that might have a slowdown in the global economy led by the US and China in this year’s half-year pose to demand special chemical companies.
Among the companies, SRF is expected to have a quarter of income and operating profit growth in the March quarter. ICICI Securities expects the company to report revenue growth of 37 percent in the year, while net income can surge 59 percent.
“The EBIT Business SRF Chemistry will increase from stable growth in fluorospecialty, and a strong price increase in ref-gas gas (HFC) and anti-dumping on HFC imports in India,” said ICICI Securities in the preview record.
The box equity sees fluorine navin income increasing 15 percent in the year while adjustable net income can grow 20 percent. “We expect refrigerant income to increase sequentially because the peak season, special chemical income increases due to a strong demand environment and inorganic fluoride income to see some slowdown from the peak of Q3,” the equity box said.
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