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LyondellBasell Expands India Reach With SJS Plastiblends Buy

Chemicals and polymers maker LyondellBasellLYB has acquired India-based polypropylene compounds maker - SJS Plastiblends Pvt. Ltd - for an undisclosed price. The Netherlands-based company, in Aug 2015, landed a definitive deal to purchase SJS Plastiblends.

SJS Plastiblends, located in Aurangabad, Maharashtra, produces products that are utilized to boost performance and aesthetics of plastics in automotive supply. The entity has a capacity to make around 12,000 metric tons of polypropylene compounds annually. Polypropylene compounds are used to make thermoplastic materials for automotive, home appliances and other markets.

India represents the fourth-biggest growth market for automobiles with 3 million new vehicles produced annually. The country's automotive market is expected to grow 6%-8% annually through 2021, according to IHS Inc.

The buyout expands LyondellBasell's foothold in India and further reinforces its position in the country's growing automotive plastics market. The acquisition is in sync with the company's strategy to grow by expanding its competitive position in lucrative markets. LyondellBasell has supplied the Indian market through imports and tolling arrangements since 2009.

LyondellBasell's profit jumped in the second quarter of 2015 as it benefited from abundant supply of low-cost natural gas. However, revenues fell by double-digits year over year, affected by lower prices of the company's products. Adjusted earnings topped the Zacks Consensus Estimate while sales missed. LyondellBasell is seeing favorable operating environment in the third quarter including favorable pricing for natural gas and natural gas liquids (NGLs).

LyondellBasell remains on track with its expansion projects that are expected to boost capacity and add to its earnings. The company also remains committed to boosting shareholder returns by leveraging healthy cash flows.

However, LyondellBasell is exposed to volatility in raw material and energy costs. Its operations are also subject to maintenance outages.

LyondellBasell is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the chemicals space include Koppers Holdings Inc. KOP , Celanese Corporation CE and Air Products & Chemicals Inc. APD . While Koppers sports a Zacks Rank #1 (Strong Buy), both Celanese and Air Products hold a Zacks Rank #2 (Buy).

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AIR PRODS & CHE (APD): Free Stock Analysis Report

CELANESE CP-A (CE): Free Stock Analysis Report

KOPPERS HOLDNGS (KOP): Free Stock Analysis Report

LYONDELLBASEL-A (LYB): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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