Q4 is a quarter marked by high volatility in crude prices. Crude touched around US$130/barrel against average of US$85/barrel during Q3. With the unprecedented rise in crude prices, there was a surge in intermediate prices of most base chemicals. Since most of our coverage universe companies carry inventories for at least a quarter, we expect minimal impact on the GPM during Q4FY22E. We also expect MTM inventory gains for few companies in Q4, which could lead an improvement in gross margins, to some extent. On the other hand, given that crude is still hovering at US$100/barrel, it is prudent to see, how most chemical companies will be able to pass on input price inflation in Q1FY23E. In terms of topline growth outlook for Q4FY22E, we expect healthier demand environment across end user industries to have led to strong revenue performance for our coverage universe, amid better volumes & realisations growth. We expect our coverage universe companies to report topline growth of 29.3% YoY. We expect OPM for our coverage universe to expand 283 bps YoY to 20.9%, leading to EBITDA growth of 49.6%. Bottomline of our coverage universe is expected to report growth of 75% YoY, led by higher other income and lower tax outgo.
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