Management confirms that agrochemical demand remains weak and if demand recovers, then combined with the recently commissioned MPP agro intermediate, upcoming commissioning of another agro active/intermediate plant in Q4FY24 and launch of two diketene products in Q4FY24, capacity utilization to ramp up to 70-80% within next 18months. Vitamin demand has been stable during the quarter but competitive intensity appears to have increased, especially from the Chinese players. The company is also working on a capex plan for enhancing capacity of choline and specialty premix products and food grade Vitamin B4. Despite a large capacity being shut by a competitor, margins are yet to recover.
OutlookAdditionally, our belief is that not only Chinese are dumping in the international market, but also adding large scale capacities which would be a challenge for Indian players going forward. The stock trades at 17x FY26 P/E. Reiterate ‘Hold’ rating with SOTP based valuation of Rs433.
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