India Glycols surges 16% in 3 days; to commission new unit by May 15

Shares of India Glycols hit a record high of Rs 1,112, on rallying per cent on the BSE in Friday’s trade on the back of near three-fold jump in trading volume. In the past three days, the stock of the commodity chemicals company has surged 16 per cent after an update on the grain based distillery units.

At 10:38 am; India Glycols traded 8 per cent higher at Rs 1,094, as compared to a 0.39 per cent rise on the S&P BSE Sensex. A combined 620,000 equity shares changed hands on the NSE and BSE.

On Wednesday, March 29, India Glycols informed that post successful installation of grain based distillery unit at Gorakhpur, trial runs are in progress and the same would be commissioned by May 15, 2022.

Further, installation of grain based distillery unit at Kashipur is in advanced stage and the same is likely to be commissioned by July 15, 2022. The delay was caused due to Covid-19 pandemic, the company said.

In the past one month, the stock has outperformed the market by surging 47 per cent, as compared to a 4.6 per cent rise on the S&P BSE Sensex. In the last one year, the stock has zoomed 155 per cent, as against a 17.6 per cent rally on the benchmark index.

The company had reported resilient performance for the first 9 months ended December 2021 (9MFY22) on the back of good bounce back in BSPC (Bio Based Specialties and Performance Chemicals) and good growth in PS (Project System) and despite shutdown and unprecedented escalation in feedstock & energy prices. Margins at 7.74 per cent in line with longer term average despite these significant head winds.

Rating agency India Ratings and Research (Ind-Ra) believes that there exists robust demand potential for the ethanol produced by India Glycols with the government’s target to achieve 20 per cent ethanol blending by 2025 (from current levels of 7 per cent-7.5 per cent). According to the management, the distilleries’ capex has a revenue potential of INR5 billion-6 billion with robust EBITDA margins of over 20 per cent.

With a significant reduction in debt; recovery in demand in chemical segments and the limited impact of divestment on profits on account of income streams from the joint venture, Ind-Ra expects India Glycols’ credit metrics to improve over the near-term, despite the company’s ongoing capex of around Rs 320 crore over FY22-FY23 to set up two grain-based distilleries.