Epigral Ltd – India’s Main Built-in Chemical Producer
Established in 2007 and headquartered in Ahmedabad, Epigral Ltd. is a pioneering drive in India’s chemical trade. Beforehand generally known as Meghmani Finechem Ltd, the corporate commenced its operations with the manufacturing of Chlor-Alkali in Dahej. It’s a main producer of Caustic Soda, Caustic Potash, Chloromethanes, Hydrogen Peroxide, Chlorine and Hydrogen. From commissioning India’s first Epichlorohydrin (ECH) plant primarily based on 100% renewable assets and organising India’s largest CPVC plant, the corporate is contributing to the nation’s infrastructural development. It has a state-of-the-art manufacturing facility located throughout 60 hectares in Dahej (Gujarat).
Merchandise and Companies
Epigral gives a various vary of important derivatives and specialty chemical substances utilized in over 15 industries.
- Chlor-Alkali (caustic soda, caustic potash, liquid chlorine, hydrogen gasoline and so on.) that finds purposes in alumina, textile, chemical substances, soaps and detergents, agrochemicals and pharmaceutical trade.
- By-product Merchandise (chloromethanes, hydrogen peroxide) that discover software in industries reminiscent of pharmaceutical, PTFE pipes, refrigerant gasoline, paper and pulp, textile, chemical substances and effluent therapy.
- Derivatives and Specialty chemical substances (CPVC resin, CPVC compound, epichlorohydrin (ECH) & chlorotoluene worth chain) utilized in pipes and fittings, windmill, vehicle, adhesives, agrichemicals and API.
Subsidiaries: As of FY24, the corporate has one affiliate firm.
Funding Rationale
- Growth plans – In FY24, Epigral added 45,000 TPA of CPVC resin capability, bringing its whole to 75,000 TPA. The corporate now plans to double this capability to 150,000 TPA by H1FY26, positioning it because the world’s largest CPVC resin plant by capability. Moreover, Epigral intends to double its Epichlorohydrin (ECH) manufacturing from 50,000 TPA to 100,000 TPA, making it the most important ECH facility in India. The mixed funding for each expansions stands at Rs.780 crore, with quantity contributions anticipated to start from FY27. The corporate can be diversifying into chlorotoluene and its worth chain – key intermediates within the manufacturing of pharmaceutical and agrochemical energetic components. This facility was commissioned in Q4FY25, with income era anticipated from H2FY26 and full capability utilization focused by the tip of FY26.
- Established place – The corporate ranks among the many high chemical producers in India, with the 4th largest caustic soda capability at 400 KTPA, third largest caustic potash capability at 21 KTPA, fifth largest chloromethanes capability at 50 KTPA, and third largest hydrogen peroxide capability at 60 KTPA. It additionally holds the nation’s largest CPVC resin capability at 75 KTPA and operates India’s first ECH plant with a capability of fifty KTPA. Moreover, in Q4FY24, the corporate commissioned India’s first chlorotoluene worth chain facility at its Dahej complicated in Gujarat.
- Q3FY25 – The corporate has achieved important quantity development on account of assorted enlargement tasks commissioned within the current quarters. Throughout Q3FY25, the corporate generated a income of Rs.645 crore, attaining a rise of 37% as in comparison with the Rs.472 crore of Q3FY24. Capability utilisation was at 81%. EBITDA improved by 49% YoY, from Rs.123 crore to Rs.183 crore. Web revenue stood at Rs.104 crore, an upsurge of 112% from Rs.49 crore of Q3FY24. Margins expanded YoY, EBITDA margin from 26% to twenty-eight% and internet revenue margin from 10% to 16%.
- FY24 – Epigral achieved a quantity development of 15% in FY24. Product combine diversification into derivatives and specialty enterprise, entry into import-substitute merchandise, catering to various industries and contribution from new tasks commissioned in FY23 aided within the quantity development. Nevertheless, income was lowered on account of lower in realization throughout all of the divisions. Firm’s income declined by 12% to Rs.1,929 crore, working revenue declined by 30% to Rs.481 crore and internet revenue declined by 44% to Rs.196 crore. It’s to be famous that in FY24, your complete trade was impacted attributable to subdued demand, over provide & realizations touching all-time low.
- Monetary Efficiency – The income and internet revenue CAGR of the corporate for the previous 3 years is round 33% and 25% between FY21-FY24. The three-year common ROE and ROCE for the corporate is round 30% and 26% for the previous 3 years. The corporate has a wholesome capital construction with a debt-to-equity ratio of 0.65.
Business
India’s chemical trade, encompassing over 80,000 business merchandise, is very various and broadly categorized into bulk chemical substances, specialty chemical substances, agrochemicals, petrochemicals, polymers, and fertilizers. Globally, India ranks because the sixth largest chemical producer and holds the third spot in Asia, contributing round 7% to the nation’s GDP. Development in sectors reminiscent of meals processing, private care, and residential care is feeling enlargement throughout numerous segments of the specialty chemical substances market. At the moment valued at US$ 220 billion, the Indian chemical trade is projected to develop to US$ 300 billion by 2030 and attain US$ 1 trillion by 2040.
Development Drivers
- An allocation of Rs.1,61,965 crore (US$ 18.7 billion) to the Ministry of Chemical substances and Fertilizers below the Union Funds 2025-26.
- 100% FDI is allowed below the automated route within the chemical substances sector with just a few exceptions that embody hazardous chemical substances.
- The Authorities of India is contemplating launching a Manufacturing Linked Incentive (PLI) scheme within the chemical sector to spice up home manufacturing and exports.
Peer Evaluation
Opponents: Grasim Industries Ltd, DCM Shriram Ltd, and so on.
Epigral demonstrates stronger gross sales development and extra strong funding returns than its opponents, reflecting efficient capital allocation and increasing market penetration.
Outlook
The corporate has demonstrated constant development, pushed by the launch of recent merchandise and a diversified product portfolio. As of the 9MFY25, the corporate has invested Rs.127 crore in CAPEX. Throughout FY24, it inaugurated a state-of-the-art Analysis and Improvement (R&D) Centre in Ahmedabad, thereby enhancing its innovation capabilities and accelerating its strategic shift in the direction of the event of specialty merchandise. The corporate goals to transition its product combine from the present 45:55 ratio of derivatives and specialty chemical substances to chlor-alkali, to a extra beneficial 70:30 ratio. This strategic realignment specializing in the event of specialised merchandise, lots of that are being launched for the primary time in India is anticipated to place the corporate as a market chief within the section. For FY25, the corporate has maintained a conservative EBITDA margin steerage of 25%, having already achieved 28% in 1HFY25. The enlargement in EBITDA has been supported by elevated manufacturing volumes, leading to higher overhead absorption together with improved realizations and the next contribution from the derivatives and specialty chemical substances enterprise.
Valuation
Epigral’s technique to extend the share of Derivatives in its product combine, coupled with import substitution alternatives, is anticipated to drive development within the coming years. Moreover, its give attention to launching ‘India’s first’ merchandise is more likely to improve its market positioning. We advocate a BUY score within the inventory with the goal worth (TP) of Rs.2,239, 26x FY26E EPS.
SWOT Evaluation
Recap of our earlier suggestions (As on 17 April 2025)
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