Chemplast Sanmar

Chemplast Sanmar reported a challenging Q3 FY26 with consolidated revenues of INR835 crores, marking a 21% YoY drop, and a net loss of INR119 crores. For the nine months of FY26, the company recorded revenues of INR2,968 crores, an EBITDA of INR4 crores, and a net loss of INR234 crores. This quarter was described as the most challenging in the last three years, impacted by multiple factors including a one-time^📎 impact of INR 2.68 crores due to new labour codes.

The Suspension PVC segment faced a difficult environment due to seasonal demand decline, weather-related production disruptions preventing feedstock ship berthing, and lower import prices exacerbated by the non-implementation of antidumping duties. Revenue for this segment was INR394 crores, down from INR525 crores last year. However, market sentiment is improving, with an uptrend in prices visible in January and February, and the company expects to reach breakeven at the PBT level by February/March 2026.

The CMCD business generated INR336 crores in revenue, with volumes increasing 13% YoY. The segment continues new product development and customer diversification, with 17 products commercialized. However, a slowdown in the agrochemicals sector impacted performance, leading to a delay in achieving the INR1,000 crores revenue target, now expected by FY27-28 instead of FY27. Initial margin guidance for CMCD is 20-25% at steady state, though it may be slightly lower during the learning curve phase.

The Paste PVC business experienced continued pricing pressure from European Union imports but saw stable domestic demand, particularly from the footwear and automobile sectors. The Cuddalore facility is operating at full capacity. Post-quarter, there has been an uptick in demand and significant inventory drawdown in January, along with some price improvements. An antidumping investigation on EU and Japan imports is ongoing, with final findings expected by the end of Q4 FY26.

Chemplast Sanmar is progressing with several capacity expansion projects. Work on MPB-3 Phase 3 is expected to complete in Q4 FY26, with pilot commissioning and gradual production ramp-up. Civil works for MPB-4 are targeted for completion in Q1 FY27. The R32 refrigerant gas capacity expansion to 14 KTPA is underway, with the first 2 KTPA swing plant expected to begin commercial sales by the end of Q4 FY26, contributing an estimated INR600 crores in annual revenue at full production.

The Value-added Chemicals segment, including caustic soda, chloromethanes, and hydrogen peroxide, reported revenues of INR105 crores, down from INR153 crores last year. This decline was primarily due to lower production at the Mettur facility caused by technical issues, which also affected hydrogen peroxide volumes. Management expects production to normalize by March 2026, with prices expected to remain stable barring material changes in market conditions.

A key positive development is the Chinese government's decision to withdraw the 13% export tax rebate on Suspension PVC, effective April 2026. This rebate, amounting to $70-80 per metric ton, previously supported Chinese exports to India. Its withdrawal is anticipated to reduce the price advantage of Chinese imports and improve market sentiment for the Indian Suspension PVC industry, potentially accelerating rationalization of carbide PVC capacity in China.

Mr. Ramkumar Shankar announced his decision to step down as Managing Director effective April 1, 2026, after 13 years at the helm. Mr. Ganesh Kumar is slated to take over, with the company expressing confidence in continued growth under his leadership. Mr. Shankar extended his appreciation to shareholders, the analyst community, and all other stakeholders for their understanding, trust, and support over the years.