Yasho Industries was established in 1985. The company manufactures specialty chemicals in its 12,500 mtpa plant at Vapi. The business is divided into two verticals- industrial and consumer chemicals. Industrial chemicals, accounting for ~83% of revenues, caters to tyres, automobile components, conveyor belts, latex gloves, industrial lubricants and greases, stabilizers and intermediates for
pharma and agrochem industries. Consumer segment caters to flavours and fragrances, dentrifices & oral care preparations, edible oils and nutraceuticals.
The Company has a market capitalisation of Rs 1855 crore and a free float of Rs 520 crore. The promoters hold 71.54% of the equity capital while the public holds 28.46%. Amongst the public, ASHISH KACHOLIA holds 4.17% while his investment company BENGAL FINANCE AND INVESTMENT PVT LTD holds 2.11%.
A HNI named JIGNESH AMRUTLAL holds 1.42% while two corporates named NISHIGANDHA POLYMERS PVT LTD and ARYAMAN CAPITAL MARKETS LIMITED hold 1.53% and 1.40% respectively.
Yasho is set to capture next leg of growth through its 17,500mtpa expansion at Pakhajan
Prabhudas Liladhar has issued a research report in which the business model of Yasho Industries and prospects is explained in a clear manner: The report reads as follows:
Completing Pakhajan greenfield project
Quick Pointers:
Greenfield expansion at Pakhajan in progress with trials ongoing as planned
Expect overall utilization to average 70% in FY25E
We recently met the management of Yasho Industries (YASHO IN). Established in 1985, the company manufactures specialty chemicals in its 12,500 mtpa plant at Vapi. The business is divided into two verticals- industrial and consumer chemicals. Industrial chemicals, accounting for ~83% of revenues, caters to tyres, automobile components, conveyor belts, latex gloves, industrial lubricants and greases, stabilizers and intermediates for pharma and agrochem industries. Consumer segment caters to flavours and fragrances, dentrifices & oral care preparations, edible oils and nutraceuticals. The company is set to capture next leg of growth through its 17,500 mtpa expansion at Pakhajan. In H1FY24, EPS stood at Rs23.2. The stock trades at 35.5x annualized H1FY24 EPS.
Existing demand remains stable, although realizations may dip: With ~Rs3bn of sales in H1FY24, the company appears to have a healthy 85-90% utilization at its 12,500mtpa Vapi plant and is expected to clock Rs6-6.5bn of revenues for FY24E. Demand for industrial segment remains strong, especially from the US, Middle East and India. Europe and rest of the world still appears to be struggling.
Pakhajan, the next leg of growth: The company is doing pilot runs at its 17,500mtpa greenfield project at Pakhajan ad is expected to start commercialization from Q1FY25. On the combined capacity of 30,000mtpa, the company guides to ~70% utilization in FY25E. Pakhajan would be primarily for high volume products.
Pakhajan offers further growth potential: Existing 12,500mtpa plant at Vapi is set across 3.5acres. Pakhajan has a total 42acres of land. In phase-I, the company is completing 17,500mtpa capacity which at current prices, could add Rs5bn to overall sales at full utilization. With continued expansions, the consumer segment’s contribution would decline to single digits going forward. Traditionally, consumer segment has lower margins compared with industrial segment for the company.
No debt repayment soon: The company does not expect any debt repayment before FY25-end and expects debt to peak at ~Rs5bn. The product pipeline consists of three new products with market potential of Rs50bn. Out of this, the company would not want to capture more than 20-25%. No forward integration is envisaged. However, in the future, we may see backward integration, more for secured supply of key raw materials than for margin expansion. Current expansions would be funded by internal accruals and fund raise already done.
Click here to download the research report on Yasho Industries
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