Q1FY22 revenue growth for specialty chemical companies under our coverage is expected to be strong on YoY basis due to the low base of Q1FY21. On QoQ basis, revenues would be boosted due to higher feedstock prices. Though margins for most companies will be optically lower due to higher revenues but stable spreads, we have not factored-in any upside risk from inventory gains. We expect revenue growth in SRF’s chemical business to remain strong, and its packaging films spreads to remain stable. Navin Fluorine would benefit from higher domestic ref-gas sales and lower fluorspar prices. Galaxy should see QoQ EBITDA growth on normalisation of costs. Rossari should benefit from rise in capacity utilisation at its Dahej plant. Sudarshan’s domestic sales would be adversely impacted while exports and specialty pigments may continue to do well. EPL’s EBITDA will bounce back on nomalisation of costs and unlocking in the developed markets.

SRF’s chemical business EBIT to grow 174% YoY / decline 11.8% QoQ to Rs2.4bn. Segmental revenues are likely to grow 50% YoY on continued strong momentum in fluoro-specialty chemicals and rise in volumes and realisations for ref-gas. Sequential decline is on seasonality in fluoro-specialties. Chemical business’ EBIT margin may shrink 90bps QoQ to 23% on rise in contribution from ref-gas. Packaging film revenues may grow 19% QoQ on higher realisations due to higher polymer prices, while BOPET and BOPP spreads are likely to remain stable; EBITDA would thus rise 3.5% QoQ to Rs2.3bn. Technical textile revenues are likely to show strong growth (+23% QoQ) on feedstock inflation, which could optically compress margins by 220bps QoQ, but we expect EBITDA to grow 8% QoQ to Rs786mn. Low base (due to lockdown) would make SRF’s EBITDA look 72% YoY higher, but it would be sequentially down 2.8% due to seasonality in the chemical business.

Navin Fluorine’s EBITDA to rise 7.2% QoQ to Rs903mn. Revenues to be up 53% YoY, but down 3.7% QoQ, to Rs3.1bn. Ref-gas revenues are likely to  grow 7.1% QoQ. Inorganic fluoride, specialty chemical and CRAMS revenues may dip 5.1%, 3.7% and 9.3% QoQ respectively. Gross profit margins may expand by 230bps QoQ due to lower fluorspar prices and higher domestic ref-gas revenues, which earn higher margins. This should drive EBITDA growth of 7.2% QoQ / 73% YoY to Rs903mn. Net profit to dip 46% QoQ to Rs657mn on one-off gains in Q4FY21.

Galaxy Surfactants’ EBITDA may rise 43% YoY / 10% QoQ to Rs1.3bn. We expect volume growth at 21.8% YoY and 0.3% QoQ. There may have been an adverse impact due to lockdown in India, while AMET volumes may have witnessed steady growth and RoW continued recovery. Thus specialty care volume growth is likely to be healthy at 2% QoQ. Revenue growth would look very high on higher lauryl alcohol prices, but margins would be optically lower. EBITDA would benefit from lower expenses QoQ on one-off costs in Q4FY21 due to bonus and higher logistic costs. We expect net profit to grow 52% YoY / 9.4% QoQ to Rs861mn.

Rossari’s net profit expected to grow 55% YoY / 9.4% QoQ to Rs241mn. We expect revenues to grow 140% YoY / 20.6% QoQ to Rs2.6bn, partly helped by higher feedstock inflation in surfactants, acetic acid and other inputs on QoQ basis. HPPC revenues are likely to be up 31% QoQ while textile chemicals and animal health & nutrition may be rise 8.2% and 19.7% QoQ, respectively. Gross profit margin may shrink 300bps QoQ on higher input costs (optical). We estimate EBITDA to grow 8.4% QoQ to Rs382mn.

Sudarshan Chemical’s EBITDA may be 4.2% higher QoQ. We expect revenues to rise 48% YoY on low base, but dip 9.4% QoQ, likely impacted from lockdown in India partially offset by higher realisations. We are factoring-in slight improvement in gross profit margin owing to pass-through of raw material prices (crude derivatives) and higher contribution of specialty pigments. Normalisation of operating leverage is likely to help drive EBITDA margin higher to 17.5%, resulting in EBITDA growth of 4% QoQ to Rs911mn. Net profit is likely to dip 4.4% QoQ to Rs511mn due to higher effective tax rate.

EPL EBITDA to grow 16.3% YoY and 22% QoQ to Rs1.7bn. Though revenues are likely to grow 29% YoY and 18% QoQ, it would largely be driven by higher feedstock price inflation. We expect gross profit to be up 17% YoY / 9% QoQ to Rs5bn, while margins would optically dip 440bps QoQ to 52.5%. EBITDA is likely to expand 22% QoQ as costs normalised from significantly higher levels in Q4FY21. We expect net profit to stage 69% YoY / 32% QoQ growth to Rs749mn.