Punjab Chemicals & Crop Protection Limited (PCCPL) A Clear Runway Ahead!

Punjab came with muted nos, with sales being flat YOY. Margins have started reviving but next quarter will also be soft. Management is guiding for resumption of growth starting Q1FY24 and a 30-35% jump in revenues in FY24. Concall notes below


  • Shifted guidance of 1500 cr. revenues to FY25 from FY24. Will probably see 30-35% growth in FY24 and there will be a shortfall in reaching 1500 cr. in FY24. Will get projections from customers in February
  • Gross margins impacted due to high cost inventory, pricing pressure from certain markets and higher energy prices. This will persist in Q4 which will be a flat quarter. Gross margins will revive in Q1FY24, if energy prices are still high then EBITDA margins can be under pressure
  • All existing contracts renewed, none of their products are in red category
  • Industry is into stock liquidation mode to reduce high cost inventory
  • CRAMS contracts over last 2-years have ramped up well, have started reaching volume projection for the Japanese customers. 1 molecule projection has been surpassed, one is in-line, and one is lagging due to registrations
  • Lalru: Expecting 1 product registration in early FY24 from Europe. Capacity utilization will increase significantly after that as there is a dedicated capacity
  • Building new chemistry capabilities in line with newer demand from CRAMS customers
  • Have commercialized 1 new product this year, 1 more product was supplied in small batches for registration purposes. Will start contributing in Q3/Q4FY24 and major contribution will flow in FY25
  • In most CRAMS relationships, have exclusive relationship. In few molecules, there is a second supplier
  • Have been able to develop local vendors for 3-4 intermediates in last few years
  • Export margins are higher than domestic
  • Volume has grown 8-10% in 9M FY23
  • Capex: Will spend 100-150 cr. in next 2-years

Disclosure: Invested (position size here, no transactions in last-30 days)