Another muted quarter for Punjab (flat sales, 46% drop in EPS). Exports took a huge drop which was countered by high domestic sales growth. Its impressive that during this entire downturn, they have maintained good gross margins, but have been hit on EBITDA/PAT margins. Concall notes below.
FY25Q3
- Prices have stabilized, export demand is subdued (higher supply, margin challenges in their patented molecules which have gone off-patent)
- EBITDA margins have been impacted due to higher freight costs and forex losses (2.3 cr.) despite 40% gross margins
- There has been delay in new product introduction for exports, they are expecting larger volumes in Q2/Q3 FY26
- Expect ~935 cr. revenues in FY25 and 12-14% growth in FY26
- Order book cycle has reduced to 2-3 quarters rather than longer cycles because customers do not want to hold high inventory
- Added new products for domestic market which has resulted in higher domestic sales (intermediates, specialty chemicals). New product portfolio contributed 15% to revenues
- Next few quarters are looking exciting, new product pipeline is exciting with higher margins
- Saw a big order in industrial chemicals from a beverage manufacturer to service their entire demand from their new upcoming facility in Gujarat. This can double the scale of their industrial division
- They will be investing in a new manufacturing unit parallelly with the customer and commercialization will only happen in late FY26 or early FY27. Exact capex commitments to be disclosed in Q2FY26
- Hindustan Coca-Cola is building a new facility in Rajkot, Gujarat to produce juice and carbonated drinks. The facility is expected to open in 2026
- They make 18-20% EBITDA margins in phosphoric acid division
- Took a 3-week maintenance shutdown at Lalru, presentation mentioned Lalru production numbers is incorrect
- 15-18 cr. is towards upgradation of existing facility in 9MFY25, majority of costs were in Q3
- Working capital cycle: 90 days for domestic, <60 days for international
Disclosure: Invested (no transactions in last-30 days)