Himadri Speciality Chemicals Limited - RESULTS FOR THE SECOND QUARTER ENDED SEP' 2017 - Q2 FY 2017-18

Himadri Speciality Chemicals 

Limited

RESULTS FOR THE

SECOND QUARTER ENDED SEP'2017

The results of HIMADRI SPECIALITY CHEMICALS Limited for the second quarter ended Sep'2017 are placed here under.


Sales went up 37% YoY. Net Profits went up 169% YoY. Himadri has chalked up impressive expansion plans considering the Huge Potential for its products.

Market price : 167
PE : 34.22 ON ANNUALISED BASIS (ON Q2 EPS X 4)

Raw material cost increased sharply. But, EBITDA/ton was up 48 percent YoY due to better prices for carbon black and Coal Tar Pitch.

On the advance carbon material pilot stage, company could dispatch 72.31 MT in Q2 2018.

EXPANSION SCHEMES : (INFO FROM MONEY CONTROL)

Advanced carbon material capacity setup for Lithium ion batteries :

Company’s update on manufacturing Advance Carbon material is very Good. This material  is used as an anode material for lithium ion batteries. Last quarter, company mentioned that it was running a pilot (5 tons per month) to manufacture anode material and in the process of setting up 50 metric tonne per month continuous process reactor.

Now, the company is setting up 20,000 MT capacity for advance carbon material in West Bengal. This augurs well for the company and implies that it is reasonably certain of product approvals from the large lithium ion battery manufacturers. (from Money control)

Additional capacity expansion – Carbon black

Company is also in the process of adding capacity of 30,000 MT for carbon black taking total capacity to 150,000 MT (14 percent of the domestic market share).

With these measures, company’s total product capacity is expected to increase by 9 percent to 638,000 MT with the funding requirement of Rs 638 crore.

NEWS EXCERPTS FROM FROM COMPANY WEB SITE :

Himadri Chemicals is leveraging its carbon competence to accelerate its growth in eight growing and profitable businesses- coal tar pitch, chemical oils, carbon black, naphthalene, advanced carbon material, corrosion protection, naphthalene sulphonate and power - that represent critical inputs in downstream industries like aluminium, graphite, construction industry, lithium-ion battery, tyre and rubber applications. Serving the core sectors of economy.

• The only integrated complex to manufacture coal tar pitch, chemical oils, carbon black , napthalene, advance carbon, corrosion protection, naphthalene sulphonate, and generate power
• Largest Indian coal tar pitch (CTP) manufacturer
• Six manufacturing facilities located in India and one in China
• Caters to 65% of the Indian aluminium and the graphite electrode industry's requirement of coal tar pitch
• One of the few global manufacturers of zero quinolene insoluble (QI) pitch, a critical input of graphite electrodes manufacture
• Credible business model endorsed by the presence of investors like Citi Venture Capital International (CVCI), IFC Washington and Bain Capital

HIMADRI CHEMICAL

 

India’s largest maker of coal tar pitch, used in making aluminium and graphite. 

Founded by Kolkata-based Choudhary family. The second generation, led by Anurag Choudhary, has taken charge. 

Secret Sauce Has the technology to convert even low quality tar into high quality coal tar pitch; has the scope to expand portfolio to 22 products from seven. 

It is easy to miss Himadri Chemicals’ plant in Singur, near Kolkata; being a lesser-known neighbour to the unfinished unit of Tata Motors’ Nano project. And even the few who did notice it, might not have guessed that what runs through a refinery-kind of network of pipes and storage tanks is coal tar. 

Coal tar? Himadri Chemicals’ CEO Anurag Choudhary is used to the casual reaction from people. “Most think it is the tar used to make roads,” he says. But for Choudhary, coal tar is a multi-billion dollar opportunity that was first spotted by his father and three uncles back in 1987. 

The main product made out of coal tar is coal tar pitch (CTP) that is used in making aluminium and graphite. “It was totally dominated by the plants of Steel Authority of India. But there was a 500 percent difference in the raw material price and selling price of CTP. We spotted the opportunity,” says Shyam Choudhary, Anurag’s father. 

In 2007, Himadri unsuccessfully tried to take over Rutgers Chemicals, a Germany-based industry leader in CTP. But for Anurag, the whole experience was an eye-opener. 

“Rutgers, a $1 billion-company, was making 22 products out of coal tar. We were making only two. So we decided to instead invest for organic growth,” he says. 

Three years later, Himadri’s portfolio has expanded from two to seven products. “Almost 75 percent of coal tar pitch we make is used by aluminium companies, who are doubling their capacities in the next two years. We are also quadrupling our capacity and setting up another unit in China, the world’s largest market and maker of aluminium,” says Anurag. 

He now wants to produce over 20 products at the Hooghly unit. Enough reasons for Bain Capital to find its first investment in India in Himadri last year and for Citigroup Venture Capital International, which had fist invested in 2006, to stay put for “at least three more years.”

 Declaration : This does not constitute a Buy/Sell/Hold Recommendation.

HIMADRI SPECIALITY	Sep '17	Jun '17	Mar '17	Dec '16	Sep '16	YOY
Net Sales	468.02	452.32	375.54	346.16	341.74	36.95
Other Operating Income	--	--	0.06	5.6	0.01
Total Income	468.02	452.32	375.6	351.76	341.75	36.95
EXPENDITURE
Consumption of Raw Materials	333.1	308.27	245.43	228.79	219.47	51.77
Increase/Decrease in Stocks	-18.16	12.53	6.99	5.89	19.22	-194.48
Employees Cost	11.53	9.84	9.57	9	9.17	25.74
Depreciation	7.89	7.89	7.73	7.7	7.76	1.68
Other Expenses	38.96	21.85	41.18	40.42	38.22	1.94
P/L Before Other Inc. , Int., Excpt. Items & Tax	94.7	91.94	64.7	59.96	47.91	97.66
Other Income	1.88	1.18	-5.22	-4.98	0.27	596.3
P/L Before Int., Excpt. Items & Tax	96.58	93.12	59.48	54.98	48.18	100.46
Interest	20.81	18.59	13.83	24.24	18.85	10.4
P/L Before Tax	75.77	74.53	45.65	30.74	29.33	158.34
Tax	24.61	24.5	15.25	10.63	10.29	139.16
Net Profit	51.16	50.03	30.4	20.11	19.04	168.7
Equity Share Capital	41.84	41.84	41.84	41.84	41.84	0
Basic EPS	1.22	1.2	0.73	0.48	0.45	171.11
Diluted EPS	1.22	1.2	0.73	0.48	0.45	171.11