Thread by @ValueEducator

Key highlights from Chemcon Specialty Chemicals Q3FY23 concall:

CMP: ₹ 270

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1. HMDS which is a key pharma intermediate used in manufacture of penicillin and its derivatives contributed Rs 27 crore during Q3FY23 with equal contribution from export and domestic market.

CMIC which is a key pharma intermediate used to make anti-HIV and anti-hepatitis B drug Tenofovir is getting more demand from the international market as against the domestic market.

2. Demand for domestic pharma has remained soft for the last few months however, the company has received purchase orders from China which will help them to improve revenues from export market.

3. The demand for HMDS and CMIC is highly dependent on the pharmaceutical industry and due to China+1 , Pharma industry is moving from China to India and due to this shift, the company expects a good demand for these 2 products going forward

CMIC right now is priced at Rs 400/kg and HMDS at Rs 650/kg.

4. The company has successfully commissioned its 2400 MTPA facility at P9 of bromobenzene and has been successfully able to enter into organic bromides.

The company was earlier only into inorganic bromides like calcium bromide, sodium bromide and zinc bromide. In Q3FY23, the company got Rs 7 crores from bromobenzene which is 9% of the total revenue.

5. The company has got inquiries from global agrochemical players for bromobenzene as it is a key intermediate used in production of some agrochemicals.

The company shelved the production of 4-CBC and 2,5-DHT and the facilities for these products will partly be utilized for CMIC depending on demand.

6. The company has sold 252 tons of bromobenzene in Q3 and expects around Rs 40 crores of revenue from this product in FY23.

7. At P9, the company is also planning to add Guanine and they have healthy enquiries for this product.

They are awaiting final approvals from local authorities for this product. The product value is at $23 with a expected 25% margin.

8. The company plans to maintain the current capacities for HMDS and CMIC and plans to add capacities for products other than CMIC and HMDS.

9. The company did some contracts for raw material sourcing for their bromides which helped them achieve a good performance for their oil field chemicals. The contracts are done on a calendar year basis with a one year timeline.

These contracts take care of 35-40% of the raw material requirement of the company and the remaining is sourced locally on an ad-h.

10. At P10 unit, the company is planning to add few pharma chemicals which are mostly imported in India. This project is expected to come on stream by Q1FY24 with an investment of Rs 22 crores.

This project has been delayed due to delay in approval from Pollution Control Board and also Guanine was not intended to be a part of P10 and the company had to seek fresh permission for inclusion of Guanine.

11. The company plans to attain peak revenue potential from P10 products by FY25.

The company plans to optimize capacities for both bromobenzene and Guanine in FY24.

By end of FY24, bromobenzene should attain a capacity utilization of 75% and Guanine should attain a capacity utilization of 85-90%.

12. Post the commissioning of the Q1FY24 capex, the company will do their future capacity expansions on the Raichur land parcel for new products.

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