STYRENIX - Styrenix Performance Materials Limited Share Price

Management provided an optimistic outlook, expecting Q4 FY25 to align with historical industry averages. Key highlights include:

Growth & Expansion:

• Thailand Acquisition: Completed 100% acquisition of Ineos Styrolution (Thailand), renamed Styrenix Thailand. Synergies include access to extrusion-grade ABS (for refrigeration liners), high-clarity SAN, and new markets (China, Vietnam, Japan). Plans to boost utilization (currently ~60%) to India-like levels over time.
• Capacity Expansion: Debottlenecked polystyrene and rubber plants (now 27 KT rubber capacity). Accelerated ABS brownfield expansion: 50 KT by mid-2026 (Phase 1), another 50 KT (Phase 2) ahead of schedule. Polystyrene capacity to grow from 100 KT to 150+ KT via brownfield studies.

Financial Performance:

• Q3 FY25 sales volume rose 34.4% YoY; revenue up 42.5% YoY. YTD PAT improved 1.1% YoY to Rs. 179 Cr. Margins dipped QoQ due to higher polystyrene mix but remain healthy.
• Fuel-saving initiatives (Dahej plant) improved efficiency; further savings delayed for SAN plant due to high utilization.

Strategic Focus:

• Leverage Thailand's OEM qualifications and technical expertise to enhance product profiles in India.
• Maintain India volume growth guidance (15"“20%) via debottlenecking and market penetration.
• Thailand's integration (consolidated from Q4 FY25) to bolster exports and specialty grades.

Management emphasized robust demand, cost optimization, and scalable growth through organic/inorganic strategies.

What were the longer-term strategic objectives and expected return on investment (ROI) for the Thailand acquisition?
The acquisition provides access to extrusion-grade ABS for refrigeration liners, water-clear SAN, and bimodal rubber technology, enabling entry into new markets (China, Vietnam, Japan) and product segments. Synergies include shared R&D, cross-market customer qualifications, and capacity utilization improvements. ROI is anticipated to be attractive due to low acquisition cost ($22M) and potential operational enhancements, though exact figures depend on execution.

Why did the Thailand business face declining sales and EBITDA losses from 2021"“2024?
Global ABS/polystyrene spreads weakened post-2021, impacting Thailand's performance. Ineos's underutilized capacity (55"“60% in 2023) and commodity-grade focus exacerbated challenges. Styrenix plans to replicate India's success by optimizing product mix, improving rubber efficiency, and leveraging high-margin specialty grades (e.g., refrigeration liners) to revive profitability.

Why did India's Q3 margins decline despite volume growth and debottlenecking?
Lower Q3 margins stemmed from a higher proportion of polystyrene (65% of sales vs. 50% historically), which has lower margins than ABS. Q2 margins included one-time supply-chain gains. ABS volumes were temporarily affected by rubber plant debottlenecking, resolved by Q4. Underlying spreads remained stable, with long-term improvements expected from fuel-switching and operational leverage.

How will the 50 kt ABS expansion (phased to 2026) impact rubber capacity requirements?
The expansion requires incremental rubber capacity. Current debottlenecking increased rubber capacity to 27 kt in India, supporting ~105 kt ABS. Thailand's 31 kt rubber capacity (with bimodal grades) may need augmentation for its 85 kt ABS plant. Further innovation in rubber efficiency is ongoing but nearing maturity, limiting significant future reductions in usage ratios.

What drove polystyrene volume growth, and how will approvals and applications shape future demand?
Debottlenecking raised polystyrene capacity to 100 kt (from 65 kt), with approvals secured for OEMs in refrigeration and appliances. Sales mix shifted to 65% GPPS (general-purpose) and 35% HIPS (high-impact), driven by durable goods (40% of volumes). Future expansion to 150 kt will target HIPS for refrigerators/ACs, supported by brownfield investments and validated customer demand.

What are the plans to improve Thailand's EBITDA, and when will profitability materialize?
Styrenix aims to raise Thailand's capacity utilization from 60% to India-like levels by optimizing product mix (higher-margin grades), accessing new markets (e.g., India's liner-grade ABS imports), and leveraging OEM qualifications. Early improvements are expected within 12 months, with no immediate CAPEX. Margins could match India's specialty-grade spreads upon execution.

How will the Thailand acquisition impact consolidated financials starting Q4 FY25?
Thailand's operations (85 kt ABS, 100 kt SAN, 31 kt rubber) will consolidate from Q4 FY25. Revenue potential at full utilization is ~Rs.1,400"“1,500 crore annually, though initial contributions may be subdued. Synergies in technology and cross-selling are prioritized over near-term financial targets.

What explains the Q3 rise in other expenses?
Higher repairs/maintenance costs from ABS rubber plant debottlenecking and polystyrene capacity upgrades drove the increase. These are non-recurring, with operating leverage expected as expansions stabilize.

How does the Thailand acquisition align with India's organic expansion plans?
The acquisition is separate from India's accelerated brownfield plans (50 kt ABS by 2026, 50 kt later). Thailand adds geographic diversification, unique technologies, and immediate capacity, complementing India's focus on domestic demand. Combined, both strategies aim to double Styrenix's ABS capacity to ~300 kt by 2028.

What are the global spread trends for ABS/polystyrene, and how insulated is India?
Global ABS spreads remain weak due to oversupply, but India's focus on specialty grades (e.g., automotive, liners) and captive consumption insulates margins. Thailand's exposure to commodity-grade ABS in Asia necessitates product differentiation for margin improvement.