Chemplast Sanmar: Cautious start to second innings

BL Analysis Bureau

Chemplast Sanmar Restricted (CSL) opened its second innings with capital markets in the present day, opening at ₹525 per share, a reduction of three per cent to its IPO value of ₹541.

The inventory inched up and was buying and selling at ₹531 at 11:00 am. The inventory is now valued at 17.4 occasions FY21 earnings in comparison with 17.7 occasions on the time of IPO (higher band), a 15 per cent premium to its closest competitor, Finolex Industries.

Though Chemplast Sanmar valuations had been within the cheap vary, we earlier beneficial buyers verify the extent of disentanglement CSL achieves from its group corporations earlier than investing.

A big a part of the IPO proceeds, each new difficulty (₹1,300 crore) and OFS (₹2,550 crore), ought to deleverage the corporate and the group obligations, which incorporates releasing the pledge on its lately merged group firm – Chemplast Cuddalore Vinyls Restricted (CCVL).

And not using a vital low cost to the IPO value, we reiterate an identical method of watching the unbiased course that CSL charts as a listed entity earlier than investing.


CSL is a part of India’s oldest enterprise home primarily based in South India, The Sanmar Group, which has pursuits in engineering, delivery and chemical substances.

After delisting within the 2012 post-2008 disaster, CSL is now the most important producer of speciality paste PVC resin and different allied merchandise, together with a rising speciality chemical substances enterprise growing its traction amongst worldwide pharma and agrochem purchasers.

CSL additionally plans on an extra capability of 35,000 tonnes within the paste PVC phase, considerably extending its dominance on this phase.


The net value of CSL turned unfavorable in FY21, not primarily based on operational or money losses, however due to restructuring, primarily in CCVL. The excellent NCDs of ₹1,238 crore had been raised in December 2019 at 17.5 per cent curiosity every year directed in direction of investing in Sanmar Group Worldwide-SGIL(₹482 crore) and reimbursement of advances acquired from its promoter Sanmar Holdings Restricted (SHL) (₹673 crore), with the remaining quantity directed in direction of servicing its debt. CSL has redeemed its investments from SGIL in FY21 and one other ₹979 crore in a JV with a gaggle entity.

In FY21, whilst CSL reported money stream from operations of ₹1,076 crore and ₹2,151 crore from the redemption of investments in associates and JVs, repaying CCVL’s debt owed to group entities largely neutralised money positive aspects. Additionally, Sanmar Engineering Providers Restricted (SESL), which holds SHL, has secured a time period mortgage of ₹1,220 crore by pledging the shares of CCVL earlier than the acquisition. The pledge continues, and the proceeds from the provide on the market are anticipated to considerably lower the debt and resolve the pledged shares. | Chemplast Sanmar: Cautious begin to second innings


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