Pondy Oxide & Chemicals

The company is allotting not only 10 lakh share at 507 but adding warrants 16lakh at same price. Thus equity will increase to1.2 crs to 1.46 crs and book value will change from 269 to 400. One of the promoter is increasing his stake from 14.32 to 15.78% and other bansal family members are not allotted share/warrants.
51.3% shares are with public and I also think it is unfair for retail investor… It would have been better if all investor would have been given opportunity to maintain their shares.

I have invested in this company in 2016 and was holding all shares till 8 Jan 2024 though price has reached to 1140 in the last year. I unable to understand what I should do at this juncture.
Any advise.

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Same problem hare sir

We are at an interesting juncture. Please note, I’m also not an expert on this subject nor I claim to have superb understanding of these recent developments.Just wanted to share some things which is going in my head.

I agree and also didn’t like terms of raising a preferential allotment at a price with such deep discount to the market price. But the interesting thing is, would we be having this conversation just a week back? The stock gave 60-65% move in just a single week that means somebody has reacted to that move before the communication was released or may be at the news of fund raise or MoU news with Tamil Nadu Government. Before the price move last week, the same fund raise would have been appraised by me at least.

I don’t understand the good vs bad about this. So I was specifically looking for the price move today to gauge how the market feels about this. I was expecting a down circuit (-10%) but to my surprise 6% down move was I guess a profit booking exercise more than anything else. Still not sure how the coming days would fare or if there would be further deeper corrections but it feels like market’s collective wisdom is taking a breather just like everyone of us.

Infusion of capital in the most general sense is fundamentally good at least from business operation point of view and gives signs that business is looking for growth in the coming days. We can argue about the quality of growth or the forensics involved but Growth is by far the least doubtable reasons whenever any management talks about QIPs, Preferential Allotments, warrants and similar stuffs.

Lastly, as per the disclosures even the other promoters except Ashish Bansal (who can be allotted warrants) will face equity dilution like most of the retail investors…right? So would the promoters not participating in such Preferential Allotment agree to it? May be Yes…if there are very close family …or if there is a true need of capital to build something bigger…and No… if they think the discount is too steep and does look like a bad deal in terms of their own equity dilution. I think ‘Yes’… because they seem like close family (not checked though)… not sure about ‘Yes’ because of growth.

What can we do - this is still at the proposed stage correct…? We can collectively vote against it… I understand it sounds funny and might not mean much. But thats one of the way to show the dissapoint ment and other being getting out of the train? Or may be the price goes closer to that level of 507₹ where the allotment starts looking good again.

The reason why we are thinking about this is simple… Risk is synonymous to returns…and like a coin, it is only possible to face a single side at once, with just a brief idea about what the other side looks. The question is…which one should we prioritise over the other?

Disc: fully invested (no trading in the last 30 days)

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Thanks for your valuable reply sir.

Thanks for your reply. I also feel this is unfair for even promoters except ceo and others.
The proposed distribution of warrants is available at bse
17c654c7-9413-4d7f-8aa1-536140cc1afb.pdf
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Another thing I have noticed that the promoters share has not changed till dec 23 and there is heavy buying in this year and price propped up from 500 on 31 dec23 to 854 in this short month.
I am really confused.
Disclosure. I am invested in this from 2016 and also traded in this year. Hence this may be my biased view.
Your and others comments has helped me and thankful to you all.

1 Like

Has anyone attended the recent EGM ? It would be great to share the notes.

Concall Notes - Feb 2024

Capex:

Machinery procurement for lead vertical expansion ongoing
Capacity to increase from 1,32,000 to 2,04,000 metric tonnes per annum
Expansion project to be commissioned by September 2024
INR300-500 crores investment planned in proposed projects
Funding structure for capex explained with two phases of capital infusion
Expected asset turnover of 8 times for new plant
New Products:

Plans to set up state-of-the-art recycling and manufacturing plant in Tamil Nadu
Progress on lithium-ion recycling unit at feasibility stage
Expected revenue generation from new plant in H2 of FY 2024-25
Targeting INR150-200 crore turnover from new unit
Margins expected to improve with new plant commissioning
EBITDA margin expected to increase to 7% with new plant
Plans for lithium-ion recycling progressing at R&D stage
Roadmap for future growth includes expanding into other verticals like plastics and aluminum
Plans for lithium-ion recycling unit at advanced R&D stage
Guidance:

Promising growth potential in coming years
Expected additional revenue of INR750 crores per annum
Expected revenue growth in FY 2024-25 to be conservative at INR1,800 crores
Expected revenue growth in FY 2024-25 to be around INR1,700-1,800 crores
Timeline for full utilization of new plant expected within first two quarters of FY 2025-26
Financials:

POCL reported 16% revenue growth in Q3 FY 2023-24
Sales increased by 22% compared to last year
EBITDA levels in lead vertical improved to 6.04%
Optimum current ratio of 1.47 and debt equity ratio of 0.83
Shareholders assented to raising capital of INR133.50 crores
Market Analysis:

Global lead acid battery recycling market growing steadily
Asia Pacific region dominates market share
Focus on exports with 55% of sales from exports
Expecting consolidation in lead recycling industry
Export sales mix to remain around 55% in the foreseeable future
Regulatory Updates:

Plans for EPR and battery waste management rules being evaluated
Updates on green lead manufacturing and EPR registration process provided

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Looks like Pondy Oxides is doing what Gravita did 3-4 years ago. It could follow a similar trajectory

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I am worried because exceptional eps of 35.6 in last Q4. Otherwise quarterly eps was around 4. Quarterly eps was POCLQtrEps23Q3…/8.71 /4.89 /3.53 /35.64 / 9.31 /10.12 /9.975 /9.055 / 12.15 /12.925/7.375 /3.845 /2.735 /0.925… 20Q2 POCL and hence I worried after result of 23 q4 if normal , ttm will drop down to 24 level from present 52 level .

Does anybody knows the reason of sudden jump in eps of 22q4?

Disc. I have exited from the stock after holding from 2016. I may be wrong.