Buy Chemplast Sanmar, target price Rs 650: ICICI Securities

ICICI Securities has buy call on Chemplast Sanmar with a target price of Rs 650. The current market price of Chemplast Sanmar is Rs 415.25.

Chemplast Sanmar, incorporated in the year 1985, is a Small Cap company (having a market cap of Rs 6593.17 Crore) operating in General sector.

Chemplast Sanmar key Products/Revenue Segments include Sale of Products, Scrap, Export Incentives, Lease Rentals and Other Services for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 1205.10 Crore, down -.49 % from last quarter Total Income of Rs 1211.06 Crore and down -17.73 % from last year same quarter Total Income of Rs 1464.73 Crore. Company has reported net profit after tax of Rs 27.14 Crore in latest quarter.

The company’s top management includes Mr.Vijay Sankar, Mr.Chandran Ratnaswami, Dr.Amarnath Ananthanarayanan, Dr.(Mrs.)Lakshmi Vijayakumar, Mr.Aditya Jain, Mr.Sanjay Vijay Bhandarkar, Mr.Prasad Raghava Menon, Mr.Ramkumar Shankar. Company has S R Batliboi & Associates LLP as its auditors. As on 31-12-2022, the company has a total of 16 Crore shares outstanding.

Investment Rationale
The brokerage anticipates custom manufacturing EBITDA contribution to rise >25% in the next 3 years which will improve mix and make capital allocation more efficient. Balance sheet remains healthy with cash balance of > Rs 10bn. The brokerage has increased its EBITDA estimate by 2.5% / 3.9% over FY23/FY24, respectively. Further, it moves its valuation methodology to SoTP (earlier: PE) to capture the value of custom manufacturing business, and rollover valuations to FY25E.

Promoter/FII Holdings
Promoters held 54.99 per cent stake in the company as of 31-Dec-2022, while FIIs owned 7.76 per cent, DIIs 26.81 per cent.