Accent Microcell Limited - A Niche Microcap with some puddles

Incorporated in Ahmedabad on April 10, 2012 Accent microcell limited is into manufacturing of a excipient named MCC à Microcrystalline cellulose

It’s one of the most used excipient in pharma value chain. MCC market is valued at $411 Million (around 2800 Crores) and is projected to reach $712.9 Million

Source – RHP

Process of manufacturing – Cellulose obtained from Wood pulp is mixed with Hydrochloric acid and mix it up and heated @105C for 15 minutes

The cellulose obtained is known as depolymerized cellulose and this Depolymerized Cellulose is Known As MCC

Value chain given in RHP


Where is MCC used in ? → in wide range of application such as pharma, textile, packaged food for anti-caking, etc. for Accent max contribution arises on account of Pharmaceutical business → 72%

If you have followed my Yasho thread (the co. has very minute division of B2C where co. manufactures the Anti-oxidant, for formulation of such anti oxidants carrier or filler is required à carrier – Helps API to reach to target site in formulation and Filler à helps in bulking the weight

Some of the competitor are

Dupont de Nemours, Inc.

Asahi Kasei Corporation

Sigachi Industries Limited

Accent Microcell Pvt. Ltd. (red flag)

DFE Pharma GmbH & Co.KG

Since the MCC market is very very tiny 2800 crores globally the exports are to facilitated in order to Ensure revenue growth → Domestic market will be sub 700 crores at max.

The major grades of MCC manufactured and marketed by Company are branded under the name “accel”. Besides “accel” they sell products under the name “acrocell”, “maccel” and “Vincel”.

The company has 2 manufacturing unit → @ Dahej and Pirana à both are running at optimum capacity @100% and 95% respectively

The company IPOed recently and there was no OFS the whole issue was Fresh infusion

Purpose of the IPO was to Install the capacity for Croscarmellose Sodium (“CCS”), Sodium Starch Glycolate and Carboxymethylcellulose (CMC)

For the amount of 54.39 crores the commercial production for which will start from March 2025

Croscarmellose sodium is a super-disintegrant, which means it helps tablets break down quickly and completely when they come into contact with moisture in the gastrointestinal tract. This property is useful for improving the dissolution and absorption of active pharmaceutical ingredients (APIs) in tablets or capsules.

Hence for pharma co. both are a need however they don’t complement each other’s value chain hence we can safely say they are venturing in horizontal integration (expansion)

Now why does Croscarmellose Sodium (“CCS”) Excite me – See below SS


The CCS margins are more than 30% although the capacity for Accent is around 2400 out of 10,400 MT capacity but a start is a start

Market for CCS is almost 850 Million double of MCC market

The EBITDA margins for the company can be sub 24% once the capacity comes live

Considering that 70% of revenue is on account of pharma it’s not surprising that Gujarat is the major contributor of their revenue and for export it’s Brazil. Their MCC market and CCS market is Big

4 members of family are paid cross of 30 Lakhs which frankly is very nominal considering that annualised pat as per Sept result can be 28 crores

Certain Redflags:-

The IPO proceeds will be used in manufacturing the capacity – the land for which is procured from the Related party at 0.6 crores à possibility of Mark up pricing

“Independent contractors” from which the whole expansion project is to be facilitated are “Patels” only à the chances of being related party not recognised by the law is high though no proof

Source – RHP

The promoter is into the same business through Unlisted entity Accent Microcell Pvt. Ltd. (red flag) which is mentioned as competitor for MCC in RHP à what’s the need for the same?

Land In Dahej SEZ is on lease (ofc) risk of non renewal
The company is owned by Patel family  average cost of acquisition is around 10 Rupees  Source – RHP
Issued on preference basis to family members @50 Just before the IPO on August 2023
Disclaimer - Not invested


The promoter is into the same business through Unlisted entity Accent Microcell Pvt. Ltd. (red flag) which is mentioned as competitor for MCC in RHP à what’s the need for the same?

Accent Microcell Pvt. Ltd seems to be a former name of this same public listed entity. After reading your analysis, I found it to be a major red flag so I tried to dig into their website for any info on this, in the career section of the website “Career – Accent Microcell Ltd.”, I found in the contact info - “(Formerly Known as Accent Microcell Pvt. Ltd.)” . So the report which you referred from while listing competitors may have made the mistake of referring some old database and hence listed it as a competitor (at-least that’s what I am thinking).


Disc : Taken some initial positions

I think there was some mix up from my end, Sorry for that.
But the company’s group company are into formulation and also into API
For excipient one has to make sure that promoter since has technical knowledge will not share the same with it’s other group companies.
Which in turn is very difficult since it’s person and not the machine.
I’ll be seeing the development here → business is good but IPO funds utilization through Patel family might be a risk and sharing technical knowledge such that the Formulation company itself enters into horizontal expansion is Risk → Personal Opinion is that I don’t see enough Risk premium to bear the risk at this price
But will surely look at appropriate level for the same :smiley: