Caustic soda prices have cooled down from Aug level. However Q2 average price was good. Combined with continuous ramp up in solar power addition and diversification, company appears to be on steady ground. As power cost is the major expenditure for caustic soda industry, increase in solar power will help in adding to the bottomline.
As regards future Outlook, experts can comment on trend in soda price trajectory.
Further to my above post, I forgot to mention about the transfermor problem which led to disruption of some production line. Don’t know it’s impact, if any.
Company reported that around 120 TPD capacity of caustic got affected due to breakdown of transformer, which is approx 12% of total capacity, that too will be affected for around 60 days, hence impact would be around 2% on annual basis
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Promoter bought more stake in November & December at Rs. 111 per share.
Q3 results should see full impact of 10MW solar capacity addition & 10MW back pressure steam turbo that were added during last few days of Q2. However, there would be some impact of softness in caustic pricing + 120 TPD capacity shutdown due to breakdown of transformer.
Globally, Ineos Inovyn (Germany) has shutdown 200ktpa in Q42025. Dow chemical will start shutting down 250 ktpa capacity in mid 2026. Further, chlorine demand is expected to remain weak in Europe/US which will squeeze caustic production.
Alumina/Aluminum segment which is one the significant user of caustic is expanding aggressively in India. Outlook of Textile sector, which also one of the biggest user of caustic, is tied to US-India trade deal.
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Sab achha lekin fayda kya ? Shareholders get nothing , company earns very good but pays peanuts of 10% dividend even in good times, promoter finds one or other way to writeoff, also they take incentive on profits but don’t reward shareholder who stood with them in bad times also
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Results in line with expectations; performance down QOQ due to 120TPS capacity shutdown & pricing pressure; also has a bit of impact due to change in Labour code, without this net profit would have grown at 24% YOY
From FY26, TGV has adopted a more conservative depreciation policy by reducing the estimated useful life of its assets. While this aggressive non-cash charge temporarily suppresses Net Profit, the company continues to deliver industry-leading EBITDA margins of approximately 15%. Excluding specialty-focused peers like Epigral, TGV’s operational efficiency remains superior. Despite the accounting-led impact on the bottom line, the stock remains undervalued, trading at a trailing P/E of 8x and a P/B of 0.8x
Forward outlook is even more compelling when we factor in its aggressive expansion roadmap slated for completion by Q4FY27. The company is set to scale its caustic soda capacity by 50%, moving from 1,000 to 1,500 TPD, while simultaneously addressing its largest cost driver through the addition of 45MW of solar power and a 50MW battery energy storage system.
What gives greater confidence in the story is that the promoter has consistently bought at ~98 per share and then at ~112 per share.
Source:
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It looks like TGV Sraac is positioned for a great rise.
It’s profits are going to be consistently near 40 crore from now onwards. Near 8-9 percent profits, there is scope for rise in revenue and decline in costs leadind to rise in profits.
I am expecting it to rise 6-7 times in the next 2 years. Actually I am betting it to become 8000 crore market cap company in the next 2 years.
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Caustic Soda prices have moved up by ~25% on the ZCE Exchange over the past 3 weeks.
It is driven by a spike in crude prices (Caustic generally moves in sync with crude – industry observation) as well as anti involution measures announced by China which will slowly fall in place. Measures include knocking off capacities greater than 20 years old and stopping freebies which in turn subsidize exports. India has a chance of increasing its export market further by getting greater market share in Indonesia and even Australia.
Iran which had potential as a low cost caustic supplier is now no longer a threat. Other projects like Taziz in the Gulf region could also get further delayed due to geopolitics.
Europe FTA will get implemented from begging 2027 which should also benefit India caustic exporters as units in Europe get singed by crippling power costs.
Domestically Textile demand is expected to pickup which was one of the key reasons for poor caustic pricing.
Currently there is lot of pessimism on the industry with anticipated entry of 2 new large players. However by the time their capacities get commissioned (which is unclear), muted Chinese net additions and continued growth in global demand should largely help offset pricing pressures structurally. Chlorine pricing should improve domestically with limited capacity adds from exiting players and the new entrants being fully integrated to PVC.
TGV stands as a concentrated bet on the caustic soda market. Grasim is a conglomerate, DCM Shriram has multiple businesses, Epigral yes but moving away from core caustic. Gujarat Alkalies most inefficient and all other companies too small and already in trouble.
Agreed that accounting practices are aggressive but better to look at EBIDTA. Cash flows are the final determinant. Over the past 5 years the company has both backward integrated to solar power and forward integrated to MDC. Smart capex decisions and execution have got it in a formidable position along with a comfortable debt equity position. Investing heavily behind growth is much better than generous dividend handouts.
Planned capex – both capacity expansion and cost saving initiatives - will support growth in the coming years.
Promoters have showcased confidence by regularly buying from market.
Deep value contra bet??? Time will tell…
Views personal and biased. No recommendation. I could be completely wrong about few or all of my assumptions. Kindly do your own research and draw your own conclusions. But importantly views welcome.
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TGV Sraac looks like it found momentum and market recognition.
If market recognises it’s true potential, this could rise to 250 to 400 in the near future. Every Quarter it’s profits going to be better and better especially when compared to the best of the chemical stocks.
Yes, I concur with that. It is certainly undervalued in whatever yardstick you apply. Replacement theory will price it minimum 5 to 6 times. It is languising at this level only due to promoters total disdain for retail investors. But that is also a blessing in disguise. Because of that promoters have created value by continuously increasing capacity, backward integration and power sector diversification. Because of their solar capacity, it is now lowest cost producer. It was bitten down on the news of Reliance/ Adani entry in the segment. But now it has strength of its own.
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Further to my earlier posting, recent developments have come to my notice, which are given below :
Company has updated information on enhancement of solar power capacity.
Company has updated regarding capacity enhancement in several products which will be reflected from Q1 unwards.
Caustic soda prices have gone up by more than 20% since Dec. With power expenses coming down due to continuous solar power addition, these will be bound to strengthen bottomline further.
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Highlights on caustic soda prices from recent conference calls:
Epigral - ECU realization’s currently at Rs 37000 vs Rs 30000 in Q4.
NALCO - expecting caustic soda at landed cost Rs 45000 per MT for 1QFY27.
DCW realizations are $400 pet MT vs $350 in Q3. ( I guess they mean ECU)
1QFY27 should logically be a strong quarter for most caustic manufacturers if current trend sustains.
Over the past one year , rupee has depreciated 18% against yuan. This helps low cost commodity chemicals with local RM to sustain better pricing in INR. Also capture new export markets where competing with China.
Views broadly on industry and personal. Kindly do your own research.
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