Investors are excited about Ammonia plant commissioning. However, we need to take following points –
(1) Gas based ammonia plant economics depends on Gas prices. As Gas prices are fluctuating a lot, economics of the ammonia plants also get fluctuating a lot ! As per management, new ammonia plant pay back period is 7 to 8 years !!. If Gas prices goes high, imported ammonia gets cheaper!!.
(2) Government also pushes green ammonia to minimize reliance on import gases. This concept is very much linked with green hydrogen economics. Considering innovation and world push on green hydrogen, this one should not ignore . (Good article link)
Regarding Ammonium Nitrate – Government is more focused on farmers and do all they can do to reduce burden on farmers by controlling fertilizers prices and its inputs. Russian and China has excess capacity. Slow down in China, could be another risk of cheap AN import.
Main customer of TAN – Coal mining. Coal India looking all option for cheap TAN and govt always help them by allowing cheap import form China and Russia.
Company has significant debt on its book and invested capital has future risk. Hence, we need to wait and watch for few qtrs. I think company has tough time ahead and unless there is significant margin of safety, it might not give good return on investment for investors
Disc – Not invested but tracking as I believe promoters capability of execution !!
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