Buy

Quarterly Update Q1FY26

Quarterly Update Q4FY25

Quarterly Update Q3FY25

Quarterly Update Q2FY25

Quarterly Update Q1FY25

Quarterly Update Q4FY24

Quarterly Update Q3FY24

Initiating Coverage Report

In FY22, AICL has posted solid set of numbers where company has shown whopping 77% rise in topline while operating profit grew by 48% as compare to FY21 & bottom line has jumped by healthy 57%. As historically Q4 & first two months of Q1 are peak revenue generators for the company, we expect AICL to grow at a healthy rate going ahead.

IG Petrochemicals Ltd (IGPL) has reported a seller margin performance led by a sharp surge in PAN/ OX spread and optimum utilization at newly commissioned capacity during the quarter. Revenue grew by 58.1% YoY to INR 4244mn mainly driven by higher realization due to short supply during Q4 as there is a healthy demand in the Paints, Plasticizers and other user industries. EBITDA surged by ~8x YoY to INR 1448mn (est INR 1178mn) with 2815bps YoY expansion in margin from 6% in Q4FY20 to 34.1% in Q4FY21 (est. 30%). This was mainly driven by 2687bps expansion in gross margin (47% vs 20.1% in Q4FY20) supported by improved PAN/OX spreads. Currently, PAN/OX spread is hovering between $250-$350 compared to a 10-year avg of $215 vs ~$320 in FY21 (as per our calculation)....

IG Petrochemicals Ltd (IGPL) reported better margin performance on the back of favourable PAN/OX spread during the quarter. Revenue de-grew by 42.7% YoY to INR 1,421mn (est INR 1,898mn) mainly impacted by production loss of 32 days led by nationwide lockdown due to COVID 19. However, demand is gradually recovering in Paints and Plasticizers to reach pre-COVID levels. EBITDA declined by 35.5% YoY to INR 157mn (est INR 155mn) with 124bps YoY improvement in margin from 9.8% in Q1FY20 to 11% in Q1FY21 (est. 8.2%). This was mainly due to 585bps expansion in gross margin (33.9% vs 28% in Q1FY20) on account of improvement in PAN/OX spread. Currently, PAN/ OX average (avg) spread is around $150 compared to 10-year avg of $200 vs $60-$100 in FY20. Under exceptional items, the company recorded expenses related to impairment in the value of the investment in subsidiary INR 6.16mn as the project was abandoned since viability was not established during the appraisal of the Project (The Subsidiary was liquidated on 12th Apr, 2020). Net profit...

Auto industry is looking forward for a better been hit when the rock bottom spread of $60-80/ton was witnessed during Q3FY20. Diwali. On the back of improvement in rural...

IG Petrochemicals Ltd (IGPL) reported weak Q4FY20 performance on all fronts due to sharp fluctuation in Raw material and finished product prices. Revenue de-grew by 14.2% YoY to INR 2,685mn (est INR 3,388mn). EBITDA declined by 56.3% YoY to INR 160mn (est INR 332mn) with 574bps YoY contraction in margin from 11.7% in Q4FY19 to 6.0% in Q4FY20 (est. 9.8%). This was mainly due to depressed gross margin (20.1% vs 23.9% in Q4FY19) led by a reduction in PAN/OX spread due to extreme volatility in raw material prices and nationwide lockdown due to COVID 19 impacted production volumes. Other expenses include one-time expense related to impairment in the value of the investment in subsidiary INR 2.95mn. During FY20, production of PAN volume has de-grew by ~3% on YoY basis. Net profit declined by 76.2% to INR43mn (est.INR142mn), due to operationally weak performance. From the time of plant shut down on March 24 (due to nationwide lockdown) till resumption of the plant in April raw material prices went down by 40-50% which led to an Inventory loss of ~35mn, which also impacted quarterly performance....

operational performance, c) higher other income and d) exceptional gains of Rs760mn. 2HFY20 in RM cost by about 375bps YoY to 79.9% of sales. Other expenses stood at 8.1% of sales, up is expected to be better than 1HFY20 with reasonable growth in exports and presence of levers ~60 bps YoY. The company reported one-offs of Rs55-60mn owing to inventory losses and for margin improvement. However, we believe current valuations already discount most of the COVID related provisions. Adjusting for one-offs, EBITDA margin stood at 8.0%. Overall,...

However, spread improved during January from average $70 to $100-110 levels, if it able to maintain current level we could see better margin performance in Q4. During Q3FY20, production of PAN vol- Stock ume grew by 20.4% on a sequential and 13% on a yearly basis on the back of favourable base. Net CMP (INR) profit declined by 74.5% to INR45mn (est. INR 101mn), due to an operationally weak performance. In order to meet growing demand and limited headroom for volume growth (capacity utilization 91%), IGPL has proposed to set up a new plant through Brownfield expansion (PA4) and increase its capacity by 53,000(TPA), taking its total capacity to 2,22,100 TPA. As per management, PA4 is expected to get commissioned in Q4FY20 (mostly in march) and expected to reach 85-90% utilization level in first year of commissioning. With capacity coming on stream, management believes they will substitute PAN import by ~30%. Currently Indian companies PAN import stands at ~15000tn/ month which...

IG Petrochemicals Ltd (IGPL), for Q2FY20, continued disappointing performance on all fronts. Revenue de-grew by 17.8% YoY to INR 2,666mn (est INR 2,461mn). EBITDA declined 79.9% YoY to INR 143mn (est INR 274mn) along with a 1661bps YoY contraction in margin from 22% in Q2FY19 to 5.4% in Q2FY19 (est. 11.1%). Gross margins were also depressed (22.4% vs 36.2% in Q2FY19) on account of reduction in PAN/OX spread due to extreme volatility in raw material prices and unforeseen events such as 50% water supply cut in MIDC area along with multiple time power issues which affected 8 days production volume. Overall one time expenses related to plant restart to reach optimum utilization level along with repair & maintenance was ~INR 80mn (included in other operating expense). During H1FY20, production of PAN volume de-grew by 8.8% on a sequential and 5.3% on...

IG Petrochemicals Ltd (IGPL), for Q4FY19, reported depressed performance. Revenue growth remains flat at 0.1% YoY to INR 3,131mn (est INR 3,221mn). EBITDA decline by 42.5% YoY to INR 367mn (est INR440mn) with 866bps YoY contraction in margin from 20.4% in Q4FY18 to 11.7% in Q4FY19 (est.13.6%) mainly due to decline in gross margins led by reduction in PAN/OX spread due to extreme volatility in raw material prices. During Q4FY19, production of PAN volume has grew by 11.6% on a sequential basis from 37,296MTn in Q3FY19 to 41,617MTn in Q4. However, on yearly basis, PAN volume grew by 7.3% due to customers resume buying which they had postponed during Q3 as stabilization in commodity prices. As we noticed stabilization in crude oil in recent months, we expect better volume uptick in going forward with improvement in margins on the back of increasing...

IGPL with PAN capacities coming on stream by the end of CY19 is well placed to capitalize on domestic opportunities. However, the near term consumption demand downturn remains a concern. Maintain BUY....

Strong downstream demand from diverse user industries and limited global capacity additions to help sustain PAN demand. We lower our FY20/21E estimates to factor in lower EBIDTA margins (17% vs 20% earlier) and delay in commissioning of new project. IGPL's planned...