It’s on the their website, the AR doesn’t mention how much % of sales is contributed by this product, would be interesting to know if any other makers as well. There is a mention of Phosphorus pentachloride in Guj Fluorochem’s concall as well.
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Hi, @Chins
Can you please share the source of this information? Im planning to analyse this data more closely.
Thanks
Hi VPs,
I have done a fundamental analysis about the company. Here it is. Enjoy the read and please feel free to share feedback.
Excel Industries is into manufacturing chemicals and water treatment units. Water treatment units and products contribute only around 1% of total revenue. The main business division is chemicals. In chemicals, the company has five divisions:
1. Agrochemical Intermediates
Agrochemicals follow the following value chain:
Basic Chemicals → Intermediates → Technicals/Actives → Formulation
Excel Industries starts from basic chemicals and then manufactures intermediates. The company mainly operates in phosphorus chemistry. Its key intermediate product is DETC.
The reaction process is:
P₂S₅ + Ethyl Alcohol → Dithio Phosphate Intermediate + Chlorine → DETC
Key raw material in manufacturing P₂S₅ is yellow phosphorus which company imports mainly from Vietnam. The company also produces other phosphorus derivatives like PCl₃, PSCl₃, etc., and agro intermediates such as DMTC, NaTCP, DMPAT, etc. Ethyl alcohol and chlorine are procured from the market and both are commodity chemicals.
In DETC, the company is the largest player globally. Other major producers include Prasol (India) and two to three manufacturers in China. Because of backward integration and economies of scale, the company is globally competitive. India itself is a large agrochemical market, so most of the products are sold domestically. These intermediates are used by national and international pesticide manufacturers such as Bayer, UPL, etc., to manufacture organophosphorus-based insecticides and herbicides.
In FY25, agrochemical intermediates generated revenue of ₹606 Cr., which is 62% of total revenue. Out of this, DETC alone contributed ₹420 Cr., which is 43% of total revenue. This shows the company is highly dependent on one product, which is DETC. Out of total DETC sales, 38% comes from non-agrochemical applications, which partially reduces concentration risk. However, the government has shown signs of banning this chemical. Any such ban can adversely affect the company’s future. In such a case, it will become a negative investment situation. The company does not have strong pricing power in this segment because these products are largely commodity in nature. This makes the company’s revenue and profit cyclical.
The key raw material, yellow phosphorus, is imported mainly from Vietnam and China. Any restriction on supply from these countries can affect the company’s operations. Despite these risks, the company has not made losses during downcycles due to economies of scale. Currently, the company is among the top five global producers of phosphonates and is the number one producer of DETC globally.
2. Specialty Chemicals
In this segment, Excel Industries sells phosphonates, mining reagents, biocides, and specialty organic phosphorus reagents. These products are used in water treatment, detergents, textile, and industrial cleaning applications.
The company classifies this segment as specialty chemicals. However, some products in this segment are commoditized, such as acetyl chloride. The company does not have strong pricing power here and performance depends on demand cycles and price cycles.
This segment contributes around 25% of total revenue. There is also significant overlap between agrochemical intermediates and specialty chemicals, mainly in phosphorus-based intermediates. Therefore, business economics of this segment is similar to the agrochemical segment.
The positive factor is that the company has backward integration into basic chemistry, which improves competitiveness and stability during difficult periods.
3. Polymer Inputs
This segment includes specialty monomers and additives used in polycarbonates, epoxies, polyester, and high-performance plastics. These products are manufactured at the Roha facility. These are specialty products, and the company enjoys some pricing power in this segment. This segment is not dependent on phosphorus chemistry.
Currently, this segment contributes around 8% of total revenue. This segment has the potential to grow at double-digit rates in the future. Here, success depends more on technical expertise rather than backward integration.
4. Pharma APIs
This division manufactures pharmaceutical active ingredients using backward-integrated intermediates. Products are used in both human and veterinary medicine. The company focuses on APIs where it has backward integration, which improves competitiveness.
The company is compliant to sell in unregulated markets such as Latin America, India, Africa, and Southeast Asia. It can also export to regulated markets such as USA, Europe, and Japan.
However, the company is small in this segment and faces competition from Indian and Chinese manufacturers. Currently, this segment contributes around 5% of total revenue.
5. Contract Manufacturing
This is a new business initiative. The company received its first contract in FY24. It secured an order from a global multinational company worth ₹50–70 Cr. annually for the next five years. Recently, in FY26, the company secured another contract from an Indian chemical company. In this model, the customer supplies raw materials and the company converts them into finished products. This can generate around ₹25 Cr. annual service revenue.
Management
The company was founded in 1941 by the Shroff family. It is currently managed by the third generation of promoters. Ashwin C. Shroff is the Executive Chairman, assisted by his sons Ravi A. Shroff, Managing Director, and Hitesh A. Shroff, Executive Director. Usha Shroff served as Executive Vice Chairperson until her death in 2019. Promoters are also associated with Transpek Industries and Excel Crop Care, which was sold to Sumitomo in 2019.
The company’s disclosures and related-party transactions appear reasonable. Management remuneration is also within regulatory limits.
In the last 20 years company has diluted equity once in FY14 through warrants issue to promoters. Company raised Rs. 13.8 Cr. in total from that. Total debt outstanding at that time was Rs. 95 Cr. and has a D/E of 0.67. Therefore it doesn’t feels like company is in much need of money rather it is a way to increase promoter shareholding with a caveat to pay 75% amount one year later. The price of issue of warrant was Rs. 69 and market price was Rs. 70/share.
The company also had investments in group companies worth ₹490 Cr. and in marketable securities and mutual funds worth ₹580 Cr. Looking at the past capex and future capex proposed for coming 3yrs, company won’t need this much liquid cash. Still management is not distributing it by way of buybacks or dividend. Rather that they are not increasing dividend payout ratio so that no further cash get accumulated. One has to keep a watch on that as substantial amount of value start deriving from investments. As of Jan 2026 Market Cap. is Rs. 1200 Cr. and value of investment is Rs. 1200 Cr.
Valuations
1. Earning Power Value
- cCFO 3yr = 260 Cr. = Rs. 86 Cr./yr.
- cCFO 5yr = 460 Cr. = Rs. 92 Cr./yr.
- cCFO 7yr = 705 Cr. = Rs. 100 Cr./yr.
- cCFO 10yr = 900 Cr. = Rs. 90 Cr./yr.
Taking the lowest avg. one CFO/yr. = Rs. 86 Cr.
Adj. CFO for maintenance capex and tax we get
Owner Earning = Rs. (86 + 13– 40) Cr./annum = Rs. 60 Cr./annum (Rs. 13 Cr. is the avg. tax payout)
Having P/E multiple of 8 we get value of business as 480 Cr.
Currently company hold investments in real estate property, market securities/MF and group companies (listed + unlisted)
- Investment in Properties = Rs. 15 Cr.
Fair Value = Rs. 15 Cr. - Investment in Group Companies = Rs. 490 Cr.
Fair Value = Rs. 490 × 0.3 = Rs. 150 Cr. - Investment in Marketable securities/Mutual Funds = Rs. 595 Cr.
Fair Value = 595 × 0.75 = Rs. 450 Cr. - Total fair value = Rs. 600 Cr.
This gives Total Value of Company = Rs. (480 + 600) Cr. = Rs. 1100 Cr. = Rs. 873/share
CMP is Rs. 973/share
2. Historical P/B
In the last 20yrs P/B ranges from 0.3 (FY09) to 4.5 (FY18). In the last 10yrs lowest P/B is 0.6. The reason behind low P/B before 2014 was high D/E (>0.8). Therefore market was punishing the company because of lack of financial resilience in the past.
We try to buy it near 0.6 P/B and sell near P/B of 2.
Current BV = Rs. 1808 Cr.
So Buy Price = Rs. 1808 Cr. × 0.6 = Rs. 1085 Cr. = Rs. 860/share
We will Sell at P/B of 2 i.e. Rs. 3616 Cr. = Rs. 2870/share
Current Price (CMP) is Rs. 973
Also looking at historical valuation there are chances that company’s valuation multiples might further deteriorate.
Risks
1. Key raw material is imported from Vietnam and China. Any disruption or policy change can affect long term viability.
2. Company derives a huge amount of revenue from DETC. There has been chances of banning the chemical by govt. In case of such ruling company will make losses.
3. Company holds lot of investment in group companies whose value has grown overtime. Currently around 30% of asset value is locked in those investments. Market may start discounting those and treat as holding company.
4. Company holds a substantial amount of liquid investments on its book (Rs 600cr). Any misuse of money is a key monitorable.
5. Management has shown some signs of grey through warrant allotment, decent high remuneration, group company investment, high cash on books, etc. Any major occurrence can be a risk.
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