ABOUT

Bhagiradha Chemicals & Industries is an Agro Chemical Company in India involved in the manufacturing of insecticides, fungicides, herbicides, etc. It was Promoted by the late Sri S. Koteswara Rao, a former scientist of the Indian Institute of Chemical Technology, Hyderabad in the year 1993.

KEY POINTS

Product Portfolio
The company’s product portfolio includes a wide range of insecticides, fungicides, herbicides, and specialty intermediaries –
a. Insecticides: Chlorpyrifos, Diafenthiuron, Fipronil, Buprofezin, etc.
b. Fungicides: Azoxystrobin
c. Herbicides: Imazethapyr, Clodinafop-propargyl, Cloquintocet-mexyl
d. Specialty-intermediaries: R-HPPA, 2,6-Dichloroaniline, etc

Product Concentration
The co. has over twenty products and expertise in other processes, the revenue streams of the co. however, are concentrated on four products which together contributed 84% of the gross sales for the co. in FY22.

Export Presence
The co. exports its products to various countries viz. USA, Brazil, Columbia, Argentina, Mexico, Costa Rica, Germany, UK, France, Portugal, Italy, Israel, Turkey, Iran, Indonesia, Taiwan, Malaysia, New Zealand, and Australia. In FY23, exports accounted for ~11% of overall revenues v/s 24% in FY22.

R&D Capabilities
The co. has an established R&D division located at the factory premises, which the Ministry of Science & Technology (GOI) also recognizes. BCIL spends about Rs 1.50 crore for R&D every year (Rs. ~4 cr in FY23). It has successfully commercialized three insecticides, namely, Fipronil, Pymetrozine, and Dinotefuran. During FY23, two Indian patents have been granted to the co.

Manufacturing Capabilities
The co. is operating its manufacturing facility in Cheruvukommupalem, Ongole, Andhra Pradesh. More than 60% of the 71.68 acres of factory land is an open area covered with a green belt and its three production blocks cater to five process lines, utilities, a quality assurance block, a warehouse, an R&D facility, etc. It has a capacity of 3250 MTPA of chemicals.

Capacity Utilization
During FY22, the co. achieved a capacity utilization (CU) of ~80% compared to ~70% in FY21.

New Facility
The co. had signed an MOU with the Government of Karnataka for setting up a manufacturing unit in Kadechur industrial area, Yadgir Dist., Karnataka, through its WOS- Bheema Fine Chemicals. The project is expected to be completed in three phases at an estimated cost of Rs 350 crore. This new unit will roll out commercial production by FY25.

Strategy
The co. is aiming to have registration approvals in place during FY24 for a couple of products that have commercial potential and also focusing on improving its overseas footprint with new strategies.

• Sales are increasing

• EBITDA margin is stable

• EPS is growing

In a recent company do allotment of 25,61,425 Convertible warrants for the company’s expansion

• In this allotment MEHUL MOHANKA who is MD of TEGA INDUSTRIES also invested.

• In this expansion company says that they will achieve 1200 cr revenue in three years(the recent highest revenue was 500 cr in FY23)

Market size and market share: Segment-wise market size and company’s share is as follows Pipes – Rs.
37000 crore/9.6%, Adhesives – Rs. 18,000 crore/4.7%, Adhesives UK – Rs. 14000 crore/2.4%, Paints – Rs.
58,000 crore/0.4% and new businesses – Rs. 25000 crore/0.8%.

The above is from the report of sharekhan in March 2022. (https://www.sharekhan.com/MediaGalary/StockIdea/Astral-3R-May18_2023.pdf)

Below is the 2Q2023 (2QFY2023-2024) concall:

Now to summarize all the four verticals, we are very happy with the performance and we
are confident that this growth momentum will continue and we will keep working hard to
gain the market share and last but not least that our core vertical that is pipe, you can see
that in spite of higher base, we are still gaining the market share and with brand getting
more and more stronger will gain more and more market share in the coming time because
we are adding a lot of new geographies in terms of manufacturing facility, which will help
us to grow market share and reduce our trade cost.

My question is how much market share Astral has in above verticals as on date

We can track the commodity and other raw material price in screener.in but it’s in premium version.

Chemical prices and it’s yields can be tracked from Tijorifinance

November 23 update:

India’s overall exports(merchandise and services combined) during Nov 2023 is estimated at USD 62.58 Billion exhibiting positive growth of 1.23% over Nov-2022.

Merchandise exports during Nov-23 is USD 33.90 Billion compared to USD 34.89 Billion in Nov-22, negative growth of -2.8%.

Services sector export during Nov-23 is estimated at 28.69 Billion compared to 26.69 Billion USD during Nov- 22.

Overall imports during Nov 23 is estimated at USD 67.88 billion exhibiting negative growth of -6.16% over Nov-22.

Overall trade deficit during April-Nov improves by 38.79% from USD 100.38 Billion in 2022 to USD 61.44 Billion in 2023.

Coffee exports continue to grow 13%for the month and 9% till Nov-23.

Rice exports’ downtrend continues with negative growth of -25% for the month.

Marine products exports fell by -12% during Nov ( was positive during October ).

Iron ore exports continue to grow significantly on a low base of last year.

Ceramic products and glassware exports moderated to 4% compared to high growth seen during the last few months.

Pharma exports grew 9% for November month and 13% so far in FY24.

Chemicals exports fell by -10% during Nov-23.

Cotton yarn/fabs grew by 8% during the month , RMG of textiles remains negative.

I would look at this strategy with skepticism. This business is a volume game – more the footfall better the revenues. Given the current economic scenario and the Indian demographics with low per capita income, prices cannot be increased beyond a limit else one risks losing footfalls.