Meghmani Organics’ agrochemical business revenue rose by 55% in Q3 FY 2021-22

Despite challenging business environment, Meghmani Organics Ltd. (MOL) revenue grew by 43.7% YoY to Rs. 6,392 million in Q3 FY22 (ended December 31, 2021) aided by higher realisation from Pigments along with improvement in volume & higher realisation from Agrochemicals business. The revenue of agrochemical business rose by 55% YoY to Rs. 4,375 million in Q3 FY22.

During the quarter, the Company’s Gross Profit grew by 24.8 % YoY to Rs. 2,535 million. As an industry wide phenomenon, MOL too faced the challenge in respect to hardening of raw material prices. Due to sudden and sharp rise of raw material prices, MOL faced challenge in terms of fully passing on to consumers. The Gross margin contracted by 600 bps YoY to 39.7% in Q3FY22. 

During Q3 FY22, PAT grew by 22.0% YoY to Rs. 679 million. The Company’s PAT margin stood at 10.6% in Q3FY22. On the Balance Sheet front, the Company’s Cash & Cash Equivalents stood at Rs. 432 million as on December 31, 2021. Debt-Equity ratio stood at 0.36 as on December 31, 2021. Meghmani Organics return ratios i.e. ROCE and ROE (annualized) stands robust at 16.3% and 21.4%, respectively as on December 31, 2021. 

India’s chemical industry is at an inflection point thanks to the multinational companies opting ‘China plus one’ strategy. Meghmani Organics foresees huge untapped growth potential for India’s chemical industry and strives to bank on the growth opportunities by remaining committed to maximize its return on investment and create value for its esteemed stakeholders.

According to MOL, the company’s revenues have grown at CAGR 8.0% over FY17-21, with higher contribution from the Agrochemical division. MOL’s backward integrated facilities ensure sustainability and lower dependency on raw material prices from China. In FY 21, the company doubled 2,4-D capacity to 22,000 MTPA and completed a new formulation plant to cater to the growing agrochemicals demand in the domestic and global market. 

MOL is positive about further development as the company’s new Multipurpose plant (MPP) at Dahej with a capex of Rs 3.10 billion is expected to be commissioned in August - September 2022. Besides, they will expand branded products portfolio to penetrate into the growing domestic market. The management eyes a revenue target of Rs. 2,500 Cr by FY24 for the Agrochemicals Division.