Analyst Meet / AGM     24-Aug-21
Conference Call
Meghmani Finechem
Expects sustainable Ebitda margins to be around 28-32%

Meghmani Finechem held a conference call on August 20, 2021 to discuss the results for the first quarter ended June 2021 and way forward. Mr. Maulik Patel - Chairman and Managing Director, Mr. Kaushal Soparkar - Managing Director, Mr. Sanjay Jain - Chief Financial Officer and Mr. Milind Kotecha – Investor Relations Officer of the company addressed the call.

Highlights of the Concall

  • The company completed the demerger process and Meghmani Finechem (MFL) got listed on NSE and BSE as a separate entity on 18th August 2021. The demerger will ensure that both the company - MOL (Meghmani Organics) and MFL have clear management focus and operate as per their business priorities.

  • The company has a singular focus of creating a world-class chemicals company with strong focus on sustainability

  • MFL, as a company was launched with a vision to create a leading chemical company with a key focus on chloroalkali and its value added derivatives.

  • Revenue grew by 111% YoY to Rs 291 crore on account of higher sales volume of chlor-alkali and its derivatives. Chlor-Alkali revenues grew 92% with growth in caustic soda 98% and caustic potash 48%. Derivative segment grew 170% on account growth in sales of chloromethanes and hydrogen peroxide in Q1FY22

  • EBITDA margin improved 190 bps to 31.9% in Q1FY22. Absolute EBITDA grew by 124% YoY and by 15% QoQ to reach at Rs 92 crore on account of improvement in realization and cost control

  • The company expects sustainable Ebitda margins to be around 28-32%

  • Ebitda margin is on the higher side compared to industry because of backward integrated captive power plant and higher plant utilizations

  • ECU realization from caustic soda improved to Rs 25183 in Q1FY22 compared to Rs 22541 in Q1FY21. ECU realization from caustic soda has improved in last few months and it is expected to further improve. ECU realization from caustic potash was impacted marginally

  • Chloromethane sales realization improved by 40% YoY and by 16% QoQ. It is expected to remain firm on account of huge demand from pharmaceutical segment

  • The company achieved highest ever capacity utilisation across divisions, despite a challenging operating environment on account second wave of covid

  • Higher capacity utilisation across products on account of improved demand

  • H2O2 plant reached 75% capacity utilisation in Q1FY22 in the very 2nd year of operation. H2O2 realization also improved 36% on QoQ basis mainly on account of increase in demand for textile and paper industry. The company is optimizing H202 capacity utilization after lockdown.

  • Caustic soda production volume increased 79% YoY on account of capacity expansion

  • The capacity utilisation of caustic potash is 88% on account of high demand.

  • Currently the company has a long term debt of Rs 128 crore and the net debt to EBITDA is 2.2 times. The company is committed to maintain it under 2.5 times.

  • The company has planned capex of Rs 700 crore in next two years comprising Epichlorohydrin (ECH) project, CPVC project and third phase of caustic. Out of total capex it has already spent Rs 135 crore till 31st March 2021. The company plans to have capex of Rs 350 crore in FY22 partly funded from borrowings and partly to the tune of Rs 100-150 crore from internal accruals

  • Post capex the company expects revenue of Rs 2000 crore
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