Plastics company IG Petrochemicals was part of the list of firms that posted strong revenue and stellar net profit growth in the latest March 2017 quarter. IG Petrochem reported 134% net profit growth YoY, and 36% growth in revenues to Rs. 289.27 crore for the fourth quarter. Its operating margins improved sharply, rising from 10.8% in last year's quarter to 15.76% this Q4.
This plastic manufacturer has a robust moat around its business, being one of two major Indian manufacturers in the phthalic anhydride space, and may be coming into strong quarters with the government's plan to expand plastic consumption in the country.
IGPL is the largest manufacturer of phthalic anhydride (PAN), which is used in the manufacture of flexible plastics for cables, films and paints, and controls a dominant 47% of India’s production capacity. Approximately 24% of India's PAN requirement is currently met through imports, which IGPL is hoping to change by expanding its capacity over the coming quarters. The firm has also entered the fiberglass plastic space through a JV in Dubai, with the Natural Oil Company. The company is expecting this diversification to improve profitability further.
The firm's only major competitor in the Indian space is Thirumalai Chemicals, compared to whom IGPL dominates in ROE, operating margins and profits. IGPL is currently the lowest cost manufacturer in its space. The full financials for the firm are here. IGPL's share price is currently above its moving averages.