Vishnu Chemicals – Is Growth sustainable?

Key Takeaways from 31st AGM held on 27-Sep-2024

• Global customers are looking at India as reliable partner in the chemical space because of multiple reasons
• The company produces chromium and barium chemicals which are irreplaceable products in multiple industries due to unique characteristics
• Export and domestic sales mis has been historically around 50: 50 and currently around 45:55
• The company does not have domestic competitors having material scale. Competition in exports as well as domestically is from competitors based out of Turkey, Russia, USA, South Africa and Kazakhstan
• The company has flexible product mix and has been working on process innovations
• The company has been working on both forward and backward integration
• It has completed brownfield expansion for precipitated barium sulfate, which is used in multiple industries including power coating and battery. It’s an import substitute product and has achieved 60% utilization in first 12 months itself
• in FY24, the company acquired Ramadas Minerals for backward integration in barium segment. It has baryte beneficiation plant based on green technology and baryte produced from this plant is internally used as raw material for barium products. The plant is running at 90% production level now.
• In the current fiscal year, the company has acquired Jayansree Pharma to manufacture strontium carbonate. It’s a new (related) product and import substitute. It finds application in electronics and EV battery industry. Trial run and test marketing is completed and commercial production is expected from April 2025. This is expected to contribute about Rs.100 crore revenue in FY26, which is scalable to Rs.200 crore over a period.
• The company expects its revenue to grow by minimum at 20% CAGR over the next 3-4 years. Levers of growth are utilization of existing capacity (current utilization level of about 75%) and products such as strontium carbonate, sodium sulphide, chromium metals, special solvents organic chemicals which they are adding.
• Red sea issue has resulted in shipping challenges and higher transportation cost. Certain customers have also asked to delay dispatches. Inventory days have also increased due to this. The company is working on solutions and also exporting to other countries, which are not impacted by this.

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