Unipar está cada vez mais resiliente – mas BTG não vê upside

BTG Pactual began covering Unipar with a neutral rating and a price target of R$68, acknowledging the company's growing resilience, but seeing little upside potential as the stock is already fairly priced. Unipar trades at R$57, down 7.7% over the past twelve months. The company is valued at R$6.4 billion on the stock exchange. Today, the share falls 1.7% on a day when Ibovespa is up.

Analyst Rodrigo Almeida wrote that Unipar is becoming more of a chlorine-alcaline platform rather than a business essentially exposed to PVC spreads, which provides a more resilient earnings base but limited upside in profits from current levels. Relevant upward revisions to profit estimates would require stronger PVC spreads, but visibility on a global PVC recovery remains low.

The analyst noted that the company's recent capital expenditure cycle, investing R$1 billion in modernizing the Cubatão plant and R$234 million in Camaçari, significantly increased its leverage, raising financial expenses and lowering EBITDA conversion to cash flow for shareholders. This will lead to greater focus on reducing leverage, limiting short-term dividends.

With the current stock valuation already reflecting much of the increased resilience, the analyst sees little additional room for valuation expansion, considering the current pricing of the company fair. In BTG's calculations, Unipar trades at 7.2 times its estimated EBITDA for the coming year, a 56% premium compared to its historical average.

The free cash flow yield is 6%, compared to a historical average of 13%, and the dividend yield is 5%, compared to a 10% average. The analyst reminded that Unipar is typically seen as a stock heavily dependent on PVC spreads, but believes this undervalues how the business operates and where profits are generated. For BTG, chlorine demand is the primary operational anchor, while caustic soda is an unavoidable co-product of the electrolysis process, and only a portion of the chlorine produced is later converted into PVC.

With PVC accounting for only 26% of EBITDA in 2026 (up from 77% in 2021), Unipar is increasingly viewed as a chlorine-alcaline platform, where higher-margin chlorine products and locally determined prices form the earnings base, while PVC represents a more cyclical source of potential upside. As chlorine products benefit from a local market structure, logistical constraints, and relatively resilient demand from sanitation, hygiene, and industrial sectors, while caustic soda is more connected to global benchmarks, Unipar's chlorine-based products enjoy a more stable margin, while caustic soda is more tied to global benchmarks, and PVC is a traditional spread business exposed to global supply-demand swings and ethylene costs.

Therefore, Unipar deserves to be viewed as a more defensive business than a pure PVC producer, but not completely isolated from commodity cycles, the analyst said. BTG is the third bank to cover Unipar, the others being Santander and XP, also with a neutral rating for the stock.