DNL started as a sodium nitrite & sodium nitrate manufacturer, before gradually widening its product portfolio over the years. Now it has a leading market position in most of its products.
It has also been doing smart acquisitions of companies with complementary product.
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Phenol Market:
The global phenol market is estimated to grow by a CAGR of 4.2% between 2022 & 2027 to reach a value of $24.07 bn.
Asia Pacific currently has the largest market share (52.5%) followed by Europe and North America.
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The Indian chemical industry is expected to be led by specialty chemicals as companies have plans to boost production to raise their export share. As a result, capacity expansions will be undertaken across the domestic industry with increased capital expenditure.
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Challenges:
The company is seen under some pressure due to:
• High Input Costs which is seeing no signs of slowdown
• It’s Phenol plants are running over its capacity already.
• It’s plans to enter new chemistry. Success in which is uncertain.
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Strengths:
• Position-
DNL has been in the chemical industry for nearly 5 decades. It is a market leader in the domestic market for sodium nitrite & nitrate, nitro toluenes & fuel additives. It is also among the top 3 global players for xylidines, cumidines & oximes.
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Products-
While the company started with a limited portfolio it has grown its product portfolio to include high-value speciality chemicals.
Currently, it has a product portfolio of over 100 products. The company has added pharma & agro-chem products to its portfolio
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Multi-purpose manufacturing facility, with significant backward and forward integration linkages -
It’s production facilities include processes that allow vertical integration for most products, leading to significant cost savings.
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Healthy ramp-up of phenolics and IPA operations at DPL–
DPL’s phenol-acetone plant showed a capacity utilisation of over 125% in FY22 despite the second wave of the pandemic in Q1 FY22, resulting in healthy revenue & cash flow generation for DNL on a consolidated basis
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Capex planning:
The company has a capex of ₹1,400cr to be incurred over next 2 years towards expansion and addition of downstream products. Such sizeable capex plans expose the company to execution & market risks, although it has a strong completion track record.
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Liquidity:
The Group has a surplus free cash & liquid investments of ~₹200 cr. DNL also has a sanctioned fund-based working capital facility of ₹320 cr at a standalone level, the utilisation of which is negligible.
It has repayment obligations of ₹67.2cr in FY23.
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Positive triggers to watch out for:
If DNL is able to sustain healthy revenue growth & profit margins on a consolidated basis, backed by a change in the product mix towards more value-added products.
However margin pressure is less likely to go away soon
Jamna Auto Industries is India’s market leader in automotive suspension solutions and is the second largest producer in the world of multi-leaf springs. It has plants at various locations in India.
The promoters, the Jauhar family, own 50% stake in the company.
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Industry:
Indian CV manufacturers feel that the need to replace ageing fleet and a revival in the economy may generate demand for close to half a million light-medium and heavy-duty trucks worth $10 bn over the next 12-18 months.
Affle is a global technology company with a proprietary consumer intelligence platform that delivers consumer recommendations and conversions through relevant Mobile Advertising. It aims to enhance returns on marketing investment through contextual mobile ads.
MTAR Technologies develops and manufactures components for the defense, aerospace & nuclear sectors. It was incorporated in 1970 to serve the technical & engineering needs of the Indian government in the post embargo regime.
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Client Base:
The company has a renowned client base, including reputed players such as Bloom Energy Corporation, ISRO, NPCIL, and DRDL.
It has established relationship with its customers and has been receiving repeat orders from its clients.
Incorporated in 1969, UPL manufactures, markets, & distributes crop protection products, intermediates, speciality chemicals & other industrial chemicals.
UPL ranks among the Top five generic agro-chemical companies in the world.
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Crop Protection Market:
The crop protection market is directly correlated to agricultural production. India is the world’s 5th largest agrochemical market. With the market size of ~$3.3Billion. It also has the fastest growth rate amongst the top 20 markets (~9%)