Q2FY25 – Unexciting performance and near-term outlook, long-term story intact

• On a consolidated basis, operating revenue grew by 12% Y-o-Y to Rs. 343.8 crores in Q2 FY ’25. EBITDA degrowth of 2% to 45.1 crores, PAT degrowth of 5% to Rs.22.8 crores
• The company is facing intense competition in Chromium exports business and higher freight cost has added to the issue.
• In the Barium segment, the company saw increased volume of the Barium sulfate product and better profitability despite increase in raw material cost
• Margin was impacted due to increased raw material cost (Chrome ore and Barytes), increased shipping cost and higher fixed costs due to scheduled maintenance taken during the quarter
• While the company is expecting significant volume growth in barium segment, challenges faced in chromium segment can take couple of quarters time to subside. Hence, profit growth in H2FY25 may not be robust
• Jayansree Pharma, which was acquired by the company in current financial year, would start manufacturing Strontium carbonate from Q1FY26. It’s an import substitute product and right now there is no other player that’s producing this in India. At full operating level, considering a 10,000-ton production two years down the line, revenue could be 140 to 150 crores.
• Chrome Mining Complex acquired in Africa for backward integration, is expected to commence operations in next 6-12 months’ time (Reaching to full operating level may take two years from now). This should provide significant cost competitiveness, which in turn should also help in volume growth and better profitability in chromium segment.
• The company is planning to increase Precipitated Barium Sulfate capacity from 30000 MTPA currently to 50k to 60k MPTA in next 2 years. The company is also looking at launching another valueadded product Chromium metal during Q1FY26

Disc: Invested. I am not SEBI registered Advisor/Analyst. My view may be biased. I am not suggesting any investment action. The information provided above is for education purpose only.