Fairchem came with flattish results (6% sales growth, flat EPS), however the internals look very strong. They grew volumes by 13% in a tough year and are confident of double digit volume growth in FY25. Additionally, they are confident that isostearic acid will reach 100% utilization by September 2024 as they have more orders than capacity. Management is expecting 15-16% EBITDA margins by Q4FY25. Concall notes below
FY24Q4
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Volume growth of 15% QoQ and value decline of ~8% (due to decrease in raw material and finished product prices**). Paint industry volume for them grew by 15%** (higher than industry level growth of 10%) due to increased penetration into existing and new customers
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Process quantity was 19,000 MT in Q4 and 65,000 MT in FY24 (13% growth in FY24). Expect ~72,000 MT in FY25
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Linoleic acid: 46% (~286 cr.), dimer acid: 27% (~168 cr.). Not seeing any Chinese dumping in dimer acid (66-70% market share in India, rest is imports)
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Export: 5% of Q4 sales
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Isostearic acid:
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Currently depressing EBITDA margins due to initial losses incurred as loss of material and high utility cost while stabilizing production process and reach desired quality level
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Did full container load exports to Europe in March and have secured more export orders from existing and new customers (in Europe, USA)
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Expect 100% capacity utilization by September 2024 and will potentially reach 15% EBITDA margins by Q4FY25
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Have more orders than what they can fulfill
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The new product they are working on with new raw material is still in R&D and they don’t expect commercialization in FY25. It’s a biodegradable product used in lubricants and other high value applications
Disclosure: Invested (position size here, no transactions in last-30 days)