Ingrevia Q4 concall notes
Lower realization in acetic anhydride and ethyl acetate, due to lower price of acetic acid.
Although the niacinamide business is still facing headwinds (due to the flu in the EU and US), the management has started witnessing improvement in demand for it.
Due to the current inventory levels of agrochemicals with customers, the demand for specialty chemicals has been subdued. Management expects normalization by the second half of FY24.
There was also a lot of energy cost increase in previous quarters, but now energy costs have been decreasing due to a reduction in coal prices, and efficiency in consumption. Further, there are plans to source power from the grid at Gajraula (this will start in Q2).
There was an improvement in demand as well as the price of Niacinamide in this quarter.
They have approved the capex to build the new cGMP-compliant facility which will produce about 3,000 tons per annum cosmetic grade of Niacinamide. Doing capex during a down cycle. confidence?
The management believes that it is the bottom that they are at in terms of margins and situation.
For their products like niacinamide and pyridine, there is competition from China. If China becomes aggressive, there will be an impact on the margins of these products.
The new diketene plant is at 65% utilization, this should grow.
Management is confident that EBITDA in FY24 will be better than in FY23.
On Chemical Intermediates, because of their new acetic anhydride plant starting, their overall sales will be better.
The niacinamide situation has gotten better in Q1 FY24 itself, in terms of demand and price. Expects normalization going forward (in a few quarters).
For specialty chemicals, the first half will stay depressed.
Overall the situation seems to be getting better, with niacinamide demand returning and better realizations, the specialty chemicals demand should get normalized by H2 when the inventory of customers drop down. The power costs should also go down as coal prices are reducing and as and when they will start taking the electricity from the grid, also the solar energy source should come online soon.
The biggest risk right now is China opening up and dumping their products, thereby impacting the realizations and margins of Ingrevia.
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