Vishnu Chemicals Limited

Vishnu Chemicals reported a strong Q1 FY25, with consolidated operating revenues increasing by 12.7% YoY and 13% QoQ to INR 338.8 crores. Consolidated EBITDA grew by 8.8% YoY to INR 55.6 crores, and PAT increased by 6.6% YoY to INR 30.5 crores. Standalone results also showed growth, with revenues at INR 258.2 crores (up 3.3% YoY) and PAT at INR 26.3 crores (up 3.1% YoY). The company achieved an all-time high production volume during the quarter.

The consolidated EBITDA margin for Q1 FY25 was 16.4%, a sequential decrease from 21.2% in Q4 FY24. Management attributed this to the monetization of higher finished goods inventory in Q4 FY24, leading to a more normalized margin in Q1 FY25. The company aims to improve its EBITDA margin to 17.5-18% by the end of FY25 and achieve a consistent 20% EBITDA margin over the next 2-3 years through process improvements, backward integration, and portfolio expansion.

The Barium business demonstrated significant growth, with revenues exceeding INR 80 crores in Q1 FY25, compared to approximately INR 60 crores in Q4 FY24. This growth was primarily driven by export markets, with export turnover reaching INR 48 crores in Q1 FY25 from INR 32 crores in Q4 FY24. The new product, Precipitated Barium Sulphate, currently operates at about 40% utilization, with a target to reach 70-75% utilization by the end of FY25, bringing overall Barium utilization to around 70%.

In Chromium chemicals, the company is operating at upwards of 80% capacity utilization, an improvement from 60-65% till FY22. Vishnu Chemicals plans to increase its Chromium capacity from 80,000 tonnes to approximately 1 lakh tonnes (a 25% increase) over the next 2 years. This expansion, coupled with a broader product portfolio, is expected to catapult its global market share from the current 8% to 12-13% in the next 3-4 years, aiming to become a global market share leader.

The company's gross debt remained stable QoQ, and finance costs were consistent at INR 9.12 crores in Q1 FY25. Vishnu Chemicals has made significant progress in reducing term loans from banks, from INR 140 crores as of March 31, 2023, to INR 84 crores as of March 31, 2024. The target is to further reduce term loans to INR 42 crores by the end of FY25. All future CapEx plans, including potential expansions in chrome metal derivatives, will be funded through internal accruals, with no plans to raise equity.

Vishnu Chemicals has implemented process and product level improvements, reducing feedstock consumption by 7-10% in its Chromium chemical vertical. The backward integration project in Vishakhapatnam, converting CO2 into soda ash, is now operating at close to 80% utilization, generating monthly savings of INR 4-4.5 crores. This in-house sourcing contributes close to 40% of soda ash requirements, enhancing security and profitability.

The company experienced a significant increase in inventory days in FY24 (262 days vs 142 days in FY23) due to logistics disruptions caused by the Red Sea crisis, which extended transit times by 2-3 weeks. To ensure continuous supply and quick dispatches, Vishnu Chemicals strategically maintained higher inventories of raw materials and finished goods. Management expects inventory days to normalize to FY23 levels as global logistics issues subside.