Can Dolly Khanna stock Pondy Oxides & Chemicals maintain its net profit CAGR of 26%? Trade Brains Trade Brains

In a bustling world, the importance of recycling waste is becoming more evident every day. Transforming waste into valuable products, especially lead, is a revolutionary industry. Lead recycling plays a crucial role in sectors like battery manufacturing, ensuring sustainability. Throughout this, we are focusing on Dolly Khanna’s stock holdings, particularly Pondy Oxides and Chemicals Limited. This article will explore Pondy Oxides and Chemicals Limited’s segments, financial metrics, future plans, and key financial indicators.

Industry Overview

The lead industry in India is poised for substantial growth, driven by expansion in the telecommunications, automotive, railways, and defense sectors. Lead is primarily utilized in storage batteries, but it is also being used more and more in UPSs, inverters, and other energy storage devices. The market for lead-acid batteries, currently estimated at US$7 billion, is projected to reach US$8.7 billion in FY27, which will grow at a 6.5% CAGR during 2021–2027. The automotive industry consumes 60% of the total lead capacity.

India’s waste and recycling markets are expected to rapidly grow in the coming year due to advancements in technology, new regulations, and increased demand for recycled content. The Indian recycling market is expected to grow to US$35.87 billion by 2028. The global market for recycling is expected to reach US$88.01 billion in the financial year 2030.

Company Overview Of Pondy Oxides and Chemicals

Pondy Oxides and Chemicals was incorporated in 1995 as a public limited company by dynamic entrepreneurs. The company is a metallic and non-metallic recycling company and is India’s largest secondary lead manufacturer of lead alloys. It is a leading smelter in India. POCL is the first Indian company to register on the London Metal Exchange for the 3N7 Lead Brand in 2019.

The company holds a 3-star export house, which is given by the Directorate General of Foreign Trade (DGFT), Ministry of Commerce and Industry, Government of India. Pondy Oxides and Chemicals Limited has more than 500 employees.

Pondy Oxides and Chemicals Limited is engaged in the production of lead, lead alloys, and PVC additives. It mainly serves battery manufacturers, chemical manufacturers, and PVC-extruded manufacturers. The company converts scraps of various forms of lead, aluminum, and copper into lead metal, aluminum metal, copper, and their alloys.

Further, it also manufactures zinc metal and zinc oxide. The company exports its products to numerous international customers, with more than 20 export destinations and more than 200 partners around the world. It has more than 270 overseas suppliers.

Segment Analysis and Manufacturing Facilities

Pondy Oxides and Chemicals Limited manufactures a total capacity of 204 KTPA of lead, 9 KTPA of plastics, 6 KTPA of copper, and 12 KTPA of aluminum. The company operates several manufacturing facilities across different divisions in India. The lead smelting sector has two divisions: Division I, located in Tamil Nadu with a capacity of 48,000 KTPA, and Division II, located in Andhra Pradesh, which boasts a lead capacity of 84 KTPA and a copper capacity of 6 KTPA.

The aluminum division, also situated in Tamil Nadu, has a production capacity of 12 KTPA. Additionally, the plastics division in Tamil Nadu can produce 9 KTPA. Furthermore, the TKD lead division, encompassing phases 1 and 2 in Tamil Nadu, has a significant capacity of 72 KTPA.

Variety of Recycling Verticals

Pondy Oxides and Chemicals Limited has more than 1,40,000 MT of scrap recycled every year. The company has four recycling verticals and business segments, such as lead, plastics, copper, and aluminum. 

Lead: The lead recycling vertical procurements are split between 85% domestic and 15% imports. The company has produced a lead with a finished goods capacity of 132000 MTPA. The finished products are mainly sold in 56% of export markets, with the remaining 44% in domestic markets. The company’s target industry will be lead-acid batteries and other battery OEMs.

Plastics: The plastics recycling vertical procurements are split equally between 50% domestic and 50% imports. The company has produced plastics with a finished goods capacity of 9000 MTPA. The finished plastic products are fully sold in domestic markets. The company’s target industries will be automobiles, appliances, furniture, paints, battery OEMs, and electronics.

Copper: The copper recycling vertical procurements are split between 5% domestic and 95% imports. The company has produced a copper finished goods capacity of 6000 MTPA. The finished products are mainly sold in 80% of export markets, with the remaining 20% in domestic markets. The company’s target industries will be copper wire and other copper applications.

Aluminum: The aluminum recycling vertical procurements are fully imported from abroad. The company has produced aluminum with a finished goods capacity of 12000 MTPA. The finished aluminum products are fully sold in domestic markets. The company’s only target industry will be automobiles.

Key Client Connections

Source: POCL Investor Presentation Q1 FY25

Financial Analysis Of Pondy Oxides and Chemicals

Looking into the financial analysis of Pondy Oxides and Chemicals Limited, the company’s revenue has increased over the last four years. The revenue of the company has increased by 3.60%, which is from 1472 crore in FY23 to 1525 crore in FY24. Pondy Oxides and Chemicals Limited’s revenue mainly comes from exports of 56%, and the remaining will be domestic sales of 44% in FY24. The company has seen revenue growth at a CAGR of 5.74% over the last four years. 

Pondy Oxides and Chemicals Limited’s net profit has fluctuated over the last three years. The company’s net profit has decreased by 18.37%, from 49 crore in FY23 to 40 crore in FY24. The net profit has grown at a CAGR of 25.74% over the past four years.

Pondy Oxides and Chemicals Limited’s operating profit margin has dropped from 4.75% to 3.97% in FY24. The NPM has also decreased from 5.12% in FY23 to 2.06% in FY24. The company’s ROE and ROCE have increased massively in the financial year 2023. Later in 2024, ROCE will decrease from 25.14% in FY23 to 16.91% in FY24, and ROE will be 8.92% in FY24.

Pondy Oxides and Chemicals Limited has reduced its borrowing from 142 crore in FY23 to 94.5 crore in FY24. This will be reflected in the debt-to-equity ratio, which is reduced from 0.56x in FY23 to 0.28x in FY24. It helps improve financial stability and increases investor confidence.

Shareholding Pattern Of Pondy Oxides and Chemicals

Pondy Oxides and Chemicals Limited has a major holding of promoters (43.64%), domestic institution investors (0.14%), financial institution investors (0.53%), and public holdings (55.69%) as of August, 2024. Ace Ashish Bansal holds (13.20%), Saroj Bansal (10.43%), Anil Kumar Bansal (9.62%), Manju Bansal (8.41%), and Pawan Kumar Bansal (1.89%), all under the promoters category.

In the public holding, Dolly Khanna has a 1.31% stake in Pondy Oxides and Chemical Limited. She has a total investment by the company of 1,70,974 shares as of August 2, 2024. In the last one year, she has decreased her stake from 3.7% in June 2023 to 1.31% in August 2024.

We can see the shareholding pattern below the stacked bar diagram.

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Future Plans Of Pondy Oxides and Chemicals

The company is planning to construct a building in Thervoykandigai, Tamil Nadu, to increase lead production capacity. This will help to achieve environmentally friendly and sustainable manufacturing practices.

POCL plans to invest in capital expenditures of INR 80 crore in FY25, with 30 crore already utilized in the first quarter of the financial year 2025.

The company will expand its capacity for lead manufacturing in phase 1 by 32000 MTPA, which is expected to commence in January 2025.

The company is focusing on being among the top 5 global companies in recycling by 2027 and also aims to achieve a turnover of more than USD 1 billion by 2030.

Pondy Oxides and Chemicals Limited is planning to increase lead production capacity from 1,32,000 metric tons to 2,04,000 metric tons per year in two phases.

The company is currently focused on expanding its export markets, which account for 56% of its revenue.

POCL is planning to establish R&D facilities to develop value-added products for its current portfolio and explore new feasible products.

Key Financial Metrics Of Pondy Oxides and Chemicals

Some of the key financial metrics of Pondy Oxides and Chemicals Limited are given below.

Conclusion

In conclusion, Pondy Oxides and Chemicals Limited is positioning itself as a leader in the recycling industry in India. The company focuses on lead, copper, aluminum, and plastics, driving future growth in sustainable practices. They’re investing in research and development for innovative products. With plans to expand lead production and enhance recycling capabilities, it aims to meet rising market demands.

Dolly Khanna, a prominent investor, currently holds a 1.31% stake in the company, reflecting her confidence in its potential. As Pondy Oxides continues to innovate and grow, its commitment to recycling and sustainability will play a vital role in shaping a greener future for the industry. What do you think about Pondy Oxides and Chemicals Limited’s future growth? Let us know in the comments below.

Written By Nikhil Naik

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The post Can Dolly Khanna stock Pondy Oxides & Chemicals maintain its net profit CAGR of 26%? appeared first on Trade Brains.

In a bustling world, the importance of recycling waste is becoming more evident every day. Transforming waste into valuable products, especially lead, is a revolutionary industry. Lead recycling plays a crucial role in sectors like battery manufacturing, ensuring sustainability. Throughout this, we are focusing on Dolly Khanna’s stock holdings, particularly Pondy Oxides and Chemicals Limited.
The post Can Dolly Khanna stock Pondy Oxides & Chemicals maintain its net profit CAGR of 26%? appeared first on Trade Brains.   Read MoreFinancials, Market, Stock Analysis, Pondy Oxides & Chemicals future plans, Pondy Oxides & Chemicals net profit CAGR, Pondy Oxides & Chemicals share price, stock market Trade Brains