ATUL - Q1 FY 19 - RESULTS REVIEW

ATUL Q1 FY 19RESULTS REVIEW

Atul is one of the largest integrated chemical companies of India.

The Company has 2 operating segments :

1.         Life Science Chemicals : APls, API intermediates, Fungicides, Herbicides

2.         Performance and Other Chemicals : Adhesion promoters, Bulk chemicals, Epoxy resins and hardeners, Intermediates, Perfumery ingredients, Textile dyes

Its Businesses are classified under 8 classes : (i) Aromatics (ii) Bulk Chemicals and Intermediates (iii) colors (iv) Crop Protection Bulk Actives (v) Crop Protection Retail (vi) Floras (vii) Pharmaceuticals and Intermediates  (viii) Polymers Performance Materials

Atul is the first company  in India to produce many products- p-cresol phosgene and Resourcinal and Tissue cultured date palms (in collaboration with the Government of Rajasthan)

Atul Has a J V  With A K Z O N O B E L   for Acetic Acid Chlorination, Hydrogenation And Distillation 

Atul’s products find use in Aeroplanes, Epoxy Resins, Hardners, foodgrains, fungicides,herbicides, cosmetics, perfumaery, Missiles, Epoxy Hardners, Fragrances, Intermediates, Dates, Agri Biotech, Footwares, Adhesives, Paints, epoxy resins, hardwares, houses, Medicines, APIs, API intermediates, clothing, Textile dyes, Tyres, Adhesion promoters,

Its sales growth was :

First 50 years : 578 Cr

Next 5 years  : 998 cr

Next 5 years : 1964 cr.

From17-18 : exponential growth is expected

In respect of Sales growth, the last 10 years had 11% p.a.

PBT grew at a CAGR of 38%.

Value of Rs.10,000 invested in Oct 2000 has become 24 lakhs in March 2017.

Share price has grown from Rs.7 to Rs.2380 between 2003 to 2016

Let us now see the Q1 results

ATUL	JUNE'18	Mar '18	Dec '17	Sep '17	Jun '17	YOY	QOQ
Net Sales	888	867	804	787	650	37	2.5
P B T	127	142	99	104	52	145	-11
Net Profit	84	100	66	70	34	145	-16
Equity Share Capital	29.7
Basic EPS	28	34	22	24	12	144	-16
MP	2835
PE	25
VOLUME	44222
PRICE TREND
20.07.18	1 week	2 week	1 month	3 month	6 month	9 month	1 year
Price	2773.7	2678.7	2681.1	2723.65	2892.8	2425.2	2427.4
Gain / Loss	2.21%	5.84%	5.74%	4.09%	-1.99%	16.90%	16.80%

WAY FORWARD : For each Business group, separate way forward risk identification etc is done.

Scale up new products through newly set up kilo Lab

Establish capacity for Fragrance Intermediate and down stream

Evaluate own manufacturing for select sunscreen actives

RISKS

Competition from China

Volatility in input prices

Fluctuations in Forex

OPPORTUNITY LANDSCAPE

North America 10% (16m to 19m)

EU13% (16m to 19m)

Eastern Europe : 7% (4m to 5m)

Developing Asia Pacific 61% (27m to 43m)

South America 8% (4m to 7m)

Middle east and Africa : 5% (1m to 3m)

Developed Asia Pacific -3% (14m to 13m)

FORWARD PATH :

Enhance market share of RF Resin

Increase capacity by de-bottlenecking and attain full capacity utilization for new caustic / chlorine plant

Add chlorine derivative products

Introduce new products

RISKS

Price and margin sensitive commodity products

Long gestation period for performance chemicals product qualification

Capacity constraint of Resorcinol

Forward path

§Increase  market share in Vat (14% 18%), Sulphur (10% 15%) and Reactive (1.2% 2.0%) dyes

§Debottleneck Sulphur black capacity

§Improve market penetration of AQ Disperse dyes (5) and related AQ intermediates (3)

§Commercialise new High Performance Pigments (5)

§Enhance product portfolio and grow in Textile chemicals through Rudolf Atul Chemicals in India

R i s k s

§ Fluctuation in demand of Vat dyes in work-wear segment

§Dependence on China for key dye intermediates

§Limited product portfolio in High Performance Pigments

Forward path

§ Expand brand business across India

§Introduce new 14 products

§Expand secondary sales

§Develop new formulation mixtures (6)

§Increase business through CRAMS

§Expand geographical reach through new registrations

R i s k s

§Business dependent on weather and pest attack

§Dependence on Herbicides product group

§Dependence on China for key intermediates

§Increased usage of GM crops

Agriculture scenario

§ Global food and agribusiness industry: US$5 tn, India: US$160 bn

§Global food production growth rate: 2% CAGR, India: 3.5% CAGR

§By 2050, planet Earth will need to double the food supply

§2010-20 declared as UN decade for deserts and fight against desertification

§2015 declared by UN as the International Year of Soils to promote more sustainable use of soils for food security and poverty alleviation

§India: 16.8% of world’s population with only 4.2% of water and 2.3% of land

§Unprecedented degradation of land (107 mn hectare) in India

§Date sector has capacity to push back the desert

§ Fertile soils are ruined, deserts expanding, and carbon

In  India, over one -fourth of India's geographical area is undergoing the process of desertification

§ Cultivation of Date Palm can help in creating fertile soil in the desert, fighting erosion, desertification and ensuring food security