Chemcrux delivers steady performance in FY21 first half despite Covid

Chemcrux Enterprise is a Specialty Chemical company listed on the BSE SME platform. Chemcrux manufactures import-substitute chemicals that go into manufacture of pharma APIs and pigments. Some of its key products are variants of Chloro Benzoic Acids and Nitro Benzoic Acid.

The company’s results for first half of FY20-21 show that it has handled the Covid phase well. There was some disruption to operations, yet company has been able to declare a steady financial performance in H1 FY21.

Key points:

  • 1 FY21 sales came in at Rs 288m, a 3% gain over sales in H1 FY20. As the company has said repeatedly, its plant has been running at optimum capacity utilisation since FY19, hence large changes in sales are not likely till it expands capacity.
  • Operations were constrained in April and May, resulting in lower than optimal capacity utilisation in H1. There is scope for some improvement in H2 revenues.
  • Operating EBITDA came in at Rs 65m as compared to Rs 68m in H1 FY20, a drop of 4%. Employee costs (+10%) and material costs (+9%) rose more than sales.
  • Chemcrux’s Balance Sheet position continues to be strong. Cash + Current Investments were Rs 123m as on 30 Sep’20, as compared to Rs 94m as on 31 Mar’20 and Rs 89m as on 30 Sep’19.
  • Total Debt was Rs 7.6m on 30 Sep’20 as compared to Rs 10.5m as on 31 Mar’20 and Rs 16m as on 30 Sep’19. Net cash was Rs 115m as on 30 Sep’20.

Its shares have done very well since Apr’20. After touching a level of Rs 60 in the last week of Mar’20, its share have rallied sharply, rising over 4x by Sep’20 to hit an all-time higher of Rs 278.90 on 29-09-2020. Prices are holding strong since then.

The rise in share price since April has reduced the steep discount the company was trading at compared to its listed peers. However, even now, Chemcrux remains among the cheapest high quality speciality chemical companies. Its smaller size compared to rivals will mean that some of the discount to peer averages is justified, however, there could be room for upside, especially once the capacity expansion plan starts rolling.

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