The shares of India’s leading recycling and manufacturing company slumped by around 5 percent on BSE to Rs. 821 during the morning trading session of Monday.
Stock Performance:
With a market capitalisation of Rs. 2,143.5 crores, at 09:50 a.m., the shares of Pondy Oxides & Chemicals Limited (POCL) were trading in the red at Rs. 827 on Monday, down by nearly 4.2 percent, as against its previous closing price of Rs. 863.
The stock hit its 52-week high at Rs. 1,191.03 on 5th September, and compared to its current trading price of Rs. 827, the stock is trading at a discount of nearly 31 percent.
The stock has delivered multibagger returns of nearly 272.4 percent of returns in one year, as well as around 118.5 percent returns in the last six months. So far in 2024, the shares of Pondy Oxides have given multibagger returns of about 232.2 percent.
Shareholding Pattern:
As per the July 2024 shareholding pattern, the Promoters hold a 43.76 percent stake in the company, Foreign Institutional Investors (FII) hold a 0.25 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold a 55.68 percent and 0.32 percent stake in Pondy Oxides, respectively.
As per the September 2024 shareholding data available with the BSE, the ace investor Dolly Khanna holds a 1.1 percent stake in Pondy Oxides.
Financials:
The company reported a significant growth in consolidated revenue from operations, experiencing a year-on-year increase of nearly 46 percent, rising from Rs. 397 crores in Q2 FY24 to Rs. 579 crores in Q2 FY25. POCL experienced this substantial growth as a result of increased production and sales in Lead, Plastics and Copper.
Likewise, during the same period, the company’s net profit increased from Rs. 6 crores to Rs. 15 crores, representing an impressive growth of around 150 percent YoY.
EBITDA for Q2 FY25 stood at Rs. 30 crores, reflecting a 71 percent YoY increase from Rs. 17.5 crores in Q2 FY24, while the EBITDA margins improved significantly, rising from 4.5 percent to 5.2 percent, over the same period.
On a half-yearly basis, the sales mix between domestic and export markets stood at 32 percent and 68 percent, respectively. The percentage of value-added products in the Lead segment has remained constant.
Key Financial Ratios:
In terms of key financial metrics, Pondy Oxides & Chemicals has a Return on Equity (RoE) of 10.6 percent and a return on capital employed (RoCE) of 14.3 percent. Additionally, the company’s debt-to-equity ratio stands at 0.37.
Product Portfolio & Future:
POCL has a broad and diversified product portfolio, with a value-added & customized product portfolio consisting of lead, copper, plastics, and aluminium.
The Lead segment offers a range of products such as Pure Lead, Lead Calcium Alloys, Lead Tin Alloys, Lead Antimony Alloys, Lead Master Alloys, and Specialty Alloys.
The Plastics segment includes industrial and engineering plastic granules, while the Copper segment features various types of copper products, including Clove, Cobra, Mill Berry, Grease Mill Berry, and Tin Mill Berry.
The Aluminium segment encompasses ADC Series (JIS Standard), LM Series (BS Standard), and tailor-made alloys crafted according to customer specifications.
As of Q2 FY25, the company’s production capacities are as follows: the Lead segment has a finished goods capacity of 1.32 lakh MTPA, with Lead Acid Battery and Other Battery OEMs; the Plastics segment has a capacity of 9,000 MTPA; the Copper segment has a capacity of 6,000 MTPA; and the Aluminium segment has a capacity of 12,000 MTPA.
POCL is also focused on expanding its portfolio to include emerging fields such as lithium-ion batteries, rubber, and e-waste, while exploring opportunities for forward integration across these business verticals.
The company aims to further increase the share of value-added products within its portfolio, with current value-added product revenues accounting for 56% and expected to rise to 70%.
Management Guidance:
POCL has set targets for 2030, which include expanding the capacity of its existing verticals, particularly in Lead, and diversifying into new verticals.
The company aims for a volume growth of over 15%, a revenue CAGR and profitability growth of more than 20%, and EBITDA margins exceeding 8%. Additionally, POCL is targeting an ROCE of over 20%, with value-added products making up more than 60% of its portfolio. The company also plans to achieve a reduction of over 20% in energy consumption to minimize its carbon footprint.
POCL is actively expanding its lead production capacity at its Thervoykandigai plant. The first phase of this expansion aims to achieve an annual production capacity of 36,000 MT, with plans to double that capacity to 72,000 MT per annum in the second phase.
The estimated capex for Phase 1 is Rs. 70 crores, which will be financed through preferential issue proceeds and internal accruals. The construction of the building and the installation of plant and machinery are currently underway, with the facility expected to be ready for trial operations by December 2024 from January 2025.
Additionally, POCL is planning to set up R&D Facilities for the creation of value-added products. These initiatives aim to enhance the company’s existing product portfolio while exploring new products that could contribute to both top-line and bottom-line growth.
During the first half of FY25, POCL invested Rs. 50 crores in capex.
Recent News:
POCL’s board and shareholders have approved the stock split in a 1:2 ratio, which means, 1 equity share having a face value of Rs. 10 per share into 2 equity shares having a face value of Rs. 5 per share with a record date of 16th October, 2024.
The board has also approved the raising of funds for an aggregate amount of up to Rs. 250 crores through Qualified Institutional Placement (QIP) in one or more tranches.
About the Company:
Incorporated in 1995, Pondy Oxides & Chemicals Limited is India’s leading recycling and manufacturing company and a pioneer in Lead and Lead Alloys. It is engaged in the business of converting scraps of various forms of lead, aluminium and copper into lead metal, aluminium metal, copper and its alloys.
Lead battery scrap is smelted by the company to produce secondary lead metal is then processed into pure lead and specific lead alloys.
Written by Shivani Singh
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