GHCL climbs 7%; hits record high on environmental nod for soda ash project

Since October 26, GHCL shares have surged 37 per cent after the company reported resilient September quarter performance despite challenging global market conditions and higher imports into India

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Shares of GHCL hit a record high of Rs 744, as they rallied 7 per cent on the BSE in Thursday’s intra-day trade after the company received environment clearance for a greenfield soda ash project. The stock has recovered 9 per cent from the day’s low of Rs 683.50. It surpassed its previous high of Rs 726 that it touched on August 27, 2024. In comparison, the BSE Sensex was down 0.23 per cent at 81,342 at 01:39 PM.

 

The company, in an exchange filing today, said that the Ministry of Environment, Forest and Climate Change, has granted it environment clearance for a greenfield soda ash project located in Kutch, Gujarat, that was communicated through a letter dated December 12, 2024.

 

GHCL is engaged in the manufacture of soda ash (Anhydrous Sodium Carbonate), that is a major raw material for detergents and glass industries and Sodium Bicarbonate (baking soda). Through a demerger, it has separated its spinning business into GHCL Textiles.

 

Since October 26, GHCL share price has surged 37 per cent after the company reported resilient September quarter (Q2FY25) performance despite challenging global market conditions and higher imports into India. 

 

The company’s realisations strengthened during the quarter despite some increase in net imports of soda ash. The global soda ash market exhibits a mixed outlook, with strong demand in certain pockets, but overall, pricing may remain range-bound as industry challenges have not yet been fully resolved.

 

The company's management said domestic prospects in soda ash look positive due to steps taken by the Indian government to encourage production of solar glass, including the 10 per cent import duty levied on imports. The company’s performance going forward will be supported by planned expansion initiatives around Vacuum Salt and Bromine, which will start contributing from next year onwards, the management added.

 

GHCL procures a sizeable portion of its key raw materials, such as salt (25 per cent), limestone (35 per cent) and lignite through captive sources, resulting in better control over input cost, thus supporting stable and healthy profitability. The company has healthy relationships with leading detergent and glass manufacturers in the domestic market.

 

To maintain market share in the domestic soda ash industry, GHCL is undertaking a large greenfield project to add 5 lakh tonnes of soda ash capacity at a new location in Kutch, Gujarat, with an estimated outlay of nearly Rs 4,500 crore. The company is in the process of obtaining regulatory approvals. As per the management, the entire process of pre-clearance is expected to be completed in fiscal 2025 (vs expectation of completion in fiscal 2024 earlier).  Further, the management has articulated that the debt-to-equity ratio would not exceed 1 time (1x) at the company level during the project implementation phase. Higher-than-expected increase in project cost or leverage will be a key rating sensitivity factor, CRISIL Ratings said.