Pondy Oxide & Chemicals

The company recently informed investors that the raw materials have been stuck at Chennai port for extended period of time due to Covid-19 related disruptions. If these raw material imports are being sourced from China, there could be severe supply chain disruptions going forward.

Read about recent developments in Pondy here


First concall

PONDY OXIDES - Q3 2022 .pdf (4.7 MB)


Wrote a detailed research blog about the company. Please feel free to review it.


Important concall snippets:


One of Pondy Oxides top clients:

Exide Inds gets into Lithium ion batteries::

Pondy looking at that vertical as well as per last concall:

The Case of Positive correlation between PondyOxide and ExideInds:
A Technical Analysis Perspective:

The period 2014-16 (yellow) played out very similarly in 2020-22, 20ma respected (blue circle) as well, following which led to a 1 year upmove (green) in 2016-17.


In case of softening of commodity prices where virgin materials will be much cheaper than recycle product , what will be relevance of recycle, lets assume Govt mandates 10-20% product from recycle still it makes the pond smaller, also the margin will not be much as cost of realization will be higher, Globally there is a trigger for ESG but in India’s domestic mkt what relevance it has, just a opinion, as ur tracking deeply plz do reply

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If the commodity prices fall below a certain point, then it become uneconomical for the smelters to run. The first ones to shut will be the ones in more expensive locations and so on. Thats the self correcting mechanism of commodity prices. Irrespective of the price of primary metal, and depending on the metal, the recycled cost will always be cheaper. For example, Aluminium is very energy extensive and geography specific to produce. Hence recycling is always a better alternative.


Company is diversifying recycling into aluminium and Plastics, as per earning call around 60 cores revenue may come from plastic segment in FY24 and product mix may change to 70-30 mix over next 2 years ( currently 90% lead and ( copper, alumunium, plastic generate 10% of revenue). Margin may improve with introduction of plastic segment.


Let me try and exhume this company story based on the recent development:

Lets start with the financials:

Last 5 year CAGR growth:
Revenue: 9%
Net Profit 21%
ROCE growing at 31.46%

Balance Sheet:

Present PE: 12.6
Present ROCE and ROE:20.9 and 21.4 respectively

POCL has embarked on a diversification plan with focus on Aluminum (commercial production already started) and Plastics. Significant revenue contribution is expected from these verticals. The diversification and ramp up in these verticals will be a key monitorable

Financial risk profile has been comfortable, with networth of Rs 198 crore and debt of Rs 107 crore, resulting in gearing of under 0.6 time as on March 31, 2022. Financial risk profile should remain healthy supported by stable profitability in fiscal 2023, acquisition of Harsha Exito Engineering Pvt Ltd admitted in National Company Law Tribunal route and the absence of any large, debt-funded capital expenditure (capex)

SWOT Analysis


  • Established technology with a long history of use
  • Reliability and robustness of lead-acid batteries
  • Cost-effectiveness compared to alternative battery technologies

Strong business risk profile
POCL enjoys a strong business risk profile, which is supported by its well-entrenched relationships with key customers, diversified procurement and supply base, moderate entry barriers and established manufacturing capabilities. Clientele comprises reputed players such as Amara Raja Batteries Ltd, Sebang Global Battery Company Ltd and Glencore International AG. Relations with these customers span over 10-15 years, ensuring steady inflow of orders.

The company also has a well-diversified supplier and procurement base, with over 270 suppliers and procurement from over 90 countries. The import of lead scrap in India is subject to licensing from the Ministry of Environment and Forest, while setting up of lead recycling plants require permissions from central and state pollution boards, which results in entry barriers for new entrants.

POCL is focusing on aluminum and plastic verticals enabling diversification. It has already started commercial production for aluminum. POCL is expected to garner revenue from aluminum and plastic verticals fiscal 2024 onwards. Also, POCL is also exploring scaling up copper vertical. The diversification and revenue contribution from these verticals will be a key monitorable.

POCL has well-established manufacturing facilities providing it logistical advantage. Its Sriperumbudur plant in Tamil Nadu is close to the Chennai port while its Chittoor plant in Andhra Pradesh is close to the Amara Raja unit. POCL has emerged as a successful bidder for Harsha Exito Engineering Pvt Ltd admitted in National Company Law Tribunal (NCLT). This provides the company with developed asset base for expansion in terms of land bank, factory building and sheds etc.


  • Limited energy density compared to lithium-ion batteries
  • Environmental concerns related to lead content and recycling
  • Relatively shorter lifespan compared to some alternative battery technologies

Stiff competition from both unorganized and organized players and susceptibility to fluctuations in raw material prices

Risks associated with change in government policies related to tightened environmental norms


  • Growing demand for energy storage solutions
  • Increasing adoption of electric vehicles and renewable energy sources
  • Government initiatives and policies promoting sustainable energy


  • Competition from alternative battery technologies such as lithium-ion batteries
  • Strict environmental regulations and disposal requirements
  • Volatility in raw material prices

Huge demand for lead acid batteries due to growth in telecom and datacenter growth (USD 59.6 Billion by the year 2032 with a CAGR of 6.9%, globally).
Demand for rear earth material including Lithium.
Growing importance for circular economy.

Liquidity: Adequate
Outlook Stable
POCL will continue to benefit from its established position in the lead metal, lead alloys, and other nonferrous metals businesses along with longstanding relationships with reputed customers

Year 2023 Highlight
The Company successfully established and commenced operations of an Aluminium Recycling/Melting facility at its factory in Sriperumbudur,Tamil Nadu.

In AR the company says: “To achieve our ambitious goal of reaching a Billion dollar top line by 2030, we are exploring various verticals, with some projects in the feasibility stage and others in prefeasibility stage”.

So, the company has set a goal to increase the revenue to ~8000 crore by 2030 from current 1400 crore which is aprox 27%-28% CAGR for next 7 years which is very ambitious, same thing was conformed by the management in the Q1FY23 concall, when customer asked how confident are you to achieve this based on the current growth rate of 6% to 7% for which the company responded saying they are very very confident of achieving this based on the new portfolio additions and demand of circular economy they will ensure the walk the talk!.

Looks like the company is poised to take the advantage of power sector growth as most of it’s products such as lead (batteries), aluminum (with 50 to 55% ), copper (EVs, consumer products, solar etc), required by the power sector