Brief notes from Valiant’s call today. Not covering basic sales and profit figures
PAP
- Presently 400MT/month. Trying to get to 500 by next month
- Still trying continuous for PAP. If not possible, can do semi-continuous (with batch process) with minor capex and can ramp up to at least 800MT
- Continuous will only start by FY24 phase wise
- By FY24, PAP will be 20-25% of revenue and 30% of revenue at full capacity
- Most of it will go to the subsidiary to make paracetamol
Dyes and pigments
- Will take 2 quarters to get better + Europe pick up
- We have 2 amonolysis plants supplying there, goes into textiles
- Hydrogenation greater than chlorination followed by amonolysis
- Want to diversify end user industry
- This year, dyes and pigments looks larger due to chlorination issues (Saigram plant)
- PAP will be largest – largely pharma
- Chrolophenol will be largely agro
- Long term Pharma 30%, dyes and pigments 25%, Agro 30%
Guidance
- Immediate improvement in chlorination
- Amonolysis in a quarter or two
- For chlorophenol, RM prices have stabilized and FY24 will be normal
- This year 900-950cr sales (flattish)
- FY24 expecting 20-25% growth, mainly from PAP and Pharma Intermediates
- Q4 margins to be much better than Q1-Q3
- Margins at 20-22% long term conservatively
- Expect to go to earlier RoE/RoA (don’t thknk it will reach 30% but mid20’s is possible)
Factors considered for now projects
- Overall synergy with Aarti group
- Import substitution opportunity
- 15-18% return per project
Valiant Labs and IPO
- Bharat Chemicals became Valiant Labs
- Can’t divulge product details – competitive in nature
Other points
- No more major debt lined up
- Saigram at 60% capacity utilization – improving since the fire. Should go up to 85% by next year
- RM price rise will be passed on with a lag
- Pilot / campaign based multi-product pharma plant set up with asset turns of 1x for innovation
Disclosure: First invested a few months back, been adding through the last week. Average price about 550 and up to over 4% of the PF. Looking to play the impending mean reversion
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