Our chemical universe is expected to report muted sequential growth, owing to the strike of the second wave of COVID-19 in Q1. Revenue for our coverage universe is likely to improve by ~69.0/4.7% YoY/QoQ. EBITDA will be up 67.9% YoY, owing to a lower base, and down 1.7% QoQ, as raw material prices have gone up and the benefit of savings on opex will wear off. The average Brent price was up 118/13% YoY/QoQ to USD 68.4/bbl in Q1. Crude oil prices have been rising and, along with that, key input prices are up too. Hence, we expect blended gross and EBITDA margins to decline.

Aarti Industries: The company's business caters largely to the pharma and agrochemical industries, which have been impacted positively by the pandemic. Speciality chemicals and pharma segments would register strong growth and drive the margin by ~53bps QoQ in Q1.

Alkyl Amines (AACL) and Balaji Amines (BLA): Revenue shall increase by 2.0/3.4% QoQ for AACL/BLA in Q1. We expect EBITDA margins for AACL/BLA to decline from 34.9/29.4% in Q4 to 30.0/25.4% in Q1, given the rising raw material prices.

Deepak Nitrite: Revenue shall increase by 3.4% QoQ in Q1 with an EBITDA margin of 26.9%. Basic chemicals, fine and speciality chemicals, and phenol segments would drive growth, going forward.

Fine Organic: Revenue shall increase by 3.1% QoQ in Q1 while EBITDA margin would be up ~54bps QoQ to 15.5%. Raw material costs have risen sharply in FY21 and continue to rise in Q1. The company has taken a price hike to protect its margins. Besides, it will take adequate price hikes in the subsequent months as the contracts with long-term customers renew.

Galaxy Surfactants (GSL): Revenue shall increase by 4.6% QoQ in Q1(led by 2.1% jump in volume, and 2.2% jump in realisation). The per unit EBITDA shall be INR 18,755/tonne. GSL is increasing its focus on its speciality portfolio and incurring heavy Capex for the same. We expect volume growth of 14/8% in FY22/23E and per unit EBITDA of INR 21,875/23,003tonne in FY22/23E.

Navin Fluorine: Speciality chemicals and CRAMS BU shall continue to demonstrate strong growth, given better product mix, robust demand, and market share gain. The refrigerant gases segment is expected to further improve on the back of a recovering automobile sector. EBITDA margin would improve sequentially by ~60bps.

NOCIL: Revenue shall be muted in Q1 with an increase of ~48bps QoQ in the EBITDA margin. The tyre industry (the biggest end-user consumer of rubber chemicals) is seeing significant recovery.

SRF: Strong growth is likely to continue in speciality chemicals (10.1% QoQ rise in revenue) and packaging films segments (5.1% QoQ rise in revenue). The current pace of recovery in the automobile sector should support the growth of refrigerant gas and technical textiles segment.

Sudarshan Chemical Ind: Revenue shall be muted in Q1 with EBITDA margin increasing by ~60bps QoQ. Good traction in the pigments segment and other product categories would be seen in domestic and exports markets.

Vinati Organics: Demand for ATBS is expected to improve QoQ, owing to increased crude oil prices. ATBS' as well as IBB's traction is extremely strong and the butyl phenol plant is ramping up.