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Chemplast Sanmar IPO  Fundamental Analysis

Brief Business Highlights

  • Based in Chennai, CSL is a specialty chemicals manufacturer in India with a focus on specialty paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors.
  • CSL also manufactures and sells other chemicals, namely, caustic soda, chloromethanes, refrigerant gas, and hydrogen peroxide.
  • The company has recently acquired CCVL (Chemplast Cuddalore Vinyls Ltd.), which is the second-largest manufacturer of suspension PVC resin in India.

Chemplast Sanmar Financial Review

Total revenues have increased substantially by 201% for FY21 to Rs 3815 crore from Rs 1265 crore in FY20. This has been due to the impact of the CCVL acquisition. Due to the acquisition of CCVL, the financial results of FY21 are not comparable to other fiscal years. The topline for FY20 has been reduced slightly to Rs 1265.51 crore from Rs 1266 crore. The profitability margins for the company were reasonable for FY20 and FY19.

Debt to equity is at high levels. Return on net worth is negative for FY21.

Table 1 - Financials and Ratios (Amount in INR Crore)
Particulars FY21 FY20 FY19
Total Revenue 3815.11 1265.51 1266.77
PAT 410.24 46.13 118.46
EBITDA 977.84 320.17 333.48
Total Assets 4486.09 4107.54 3801.56
Cash and Bank 651.26 112.72 52.25
Cash generated from operations 1076.39 166.06 234.21
EBITDA Margin 25.63% 25.30% 26.33%
Net Margin 10.75% 3.65% 9.35%

Valuation and Peer Comparison

The Issue is priced at 17.68x at EPS of 30.6 as of 31st March 2021 and calculated at the upper price band of Rs 541 per share. If we consider the earnings of FY20 (2.04 per share), the issue is exorbitantly priced at 265.20. The peer average P/E is 43.1x indicating overpricing of the Issue.

PI Ind., SRF Limited, Finolex Ind., and Navin Fluorine are the peers of the company as per RHP.


CSL is the third-largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide in the South India region, on the basis of installed production capacity as of December 31, 2020, and one of the oldest manufacturers in the chloromethanes market in India.

Caustic soda and hydrogen peroxide are largely used in the textile and paper sectors, where demand continues to be weak and improvement in these sectors is slow. Demand from the stationary sector continues to be affected due to the closure of schools and colleges. The financial performance of the Issuer does not show a true picture of the Issuer for FY21. Financials for FY20 have been hit by the pandemic and the recovery may be slower. Hence, an investor may avoid this IPO.

Reviewer recommends Avoid to the issue.

Review By CA Priyanka Choudhary on 4th Aug 2021

Review Author

About CA Priyanka Choudhary

CA Priyanka Choudhary, a freelance chartered accountant

Priyanka Choudhary Jain is a Chartered Accountant and an experienced credit analyst. She has worked with CRISIL as Senior Credit Analyst on ratings assignments including business and financial analysis in Corporates as well as the Public Finance Sector.

Email: [email protected]

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Investors should bear in mind that any investment in stock markets are subject to unpredictable market related risks. Above information is based on RHP and other documents available as of date coupled with market perception. Author has no plans to invest in this offer.

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