Clean Science and Technology Limited, a specialty chemicals company based in Pune, India, reported its financial performance for Q1 FY24. Despite a 19.6% decline in revenue, the company demonstrated resilience through a higher EBITDA margin of 41.3% and a commitment to sustainability. Clean Science operates in three key segments: Performance Chemicals (67% of revenue), Pharmaceutical Intermediates (19% of revenue), and FMCG Intermediates (13% of revenue). Notably, Performance Chemicals is the primary revenue driver. The company highlighted a shift in the business environment from high inflation and supply chain disruptions to benign inflation and geopolitical stability. Clean Science anticipates a gradual recovery throughout the year, focusing on enhancing operational efficiencies, diversifying its product portfolio through R&D, and expanding its global presence.
Stock Data
| Ticker | CLEAN |
| Industry | Specialty Chemicals |
| Exchange | NSE |
Share Price
| Last 5 Days | -0.2% |
| Last 1 Month | -3.1% |
| Last 6 Months | 2.9% |
Business Basics
Clean Science and Technology Limited is a specialty chemicals company engaged in the manufacturing of performance chemicals, pharmaceutical intermediates and FMCG chemicals. The company was founded in 2003 and is headquartered in Pune, India. Clean Science operates with a focus on sustainability and eco-friendliness, and all its products are manufactured through sustainable processes. The company’s product portfolio includes multiple products, such as MEHQ (Methyl Hydroxybenzoate), BHA (Butylated Hydroxyanisole), and Anisole. Its performance chemicals segment caters to the global demand for specialty chemicals across industries such as pharmaceuticals, agrochemicals, and personal care. The pharmaceutical intermediates segment produces key intermediates used in the production of various life-saving drugs. The FMCG chemicals segment produces ingredients used in products such as toothpaste, soaps, and detergents.
Q1 FY24 Financial Performance
Clean Science & Technology Ltd reported Revenues for Q1FY24 of ₹188.11 Crores down from ₹234.07 Crore year on year, a fall of 19.6%. The revenue decline is primarily attributed to a two-thirds reduction in volume and one-third decrease in realization, as per the management. Revenue mix consisting of 63% exports and 37% domestic sales. Consolidated Net Profit of ₹58.94 Crores down 6.35% from ₹62.90 Crores in the same quarter of the previous year. The Earnings per Share is ₹5.55.
EBITDA decreasing to Rs. 77 Crores from Rs. 91 Crores in Q1 FY23. A higher EBITDA margin of 41.3% in Q1 FY24 compared to 39.4% in Q1 FY23, driven by a favorable product mix, benign input prices, and prudent cost management. Despite the decrease in revenue, higher EBITDA margins reflect the company’s technological progress and efficient cost structure.
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Clean Science’s Segment Revenue
The company operates across three distinct product segments: Performance Chemicals, Pharmaceutical Intermediates, and FMCG Intermediates. Among these segments, Performance Chemicals stands as the primary revenue driver, constituting a significant 67% of the total revenues. Within the Performance Chemicals segment, the company offers a range of specialty chemicals, including MEHQ, BHA, and TBHQ, which find applications in diverse industries such as food, cosmetics, and polymer stabilizers.
The Pharmaceutical Intermediates segment holds its ground as a substantial contributor to the company’s revenue, accounting for 19% of the total. In this segment, the company provides various essential products like Guanidine Hydrochloride, 4-Cyanophenol, and 4-Aminophenol, which play a crucial role in the production of drugs and medicines for the pharmaceutical industry.
The third segment, FMCG Intermediates, specializes in offering a variety of ingredients, such as Para Anisic Aldehyde and Anisyl Acetate, which are integral components in the manufacturing of perfumes, flavors, and other consumer goods. Although the FMCG segment represents a smaller portion of the company’s overall revenue, it still contributes a notable 13%, and it has demonstrated marginal revenue growth in recent times.
Revenue From Different Geographies (Q1 FY23 vs Q1 FY24)
Clean Science’s revenue distribution across different geographies in Q1 FY23 and Q1 FY24 reveals noteworthy trends. In its domestic market, India, the company experienced a slight uptick from 35% in Q1 FY23 to 37% in Q1 FY24, suggesting a growing demand for clean and sustainable products within the country. However, the Chinese market witnessed a substantial decline, with revenues dropping from 32% to 21In Europe, Clean Science maintained relative stability, with revenues decreasing slightly from 14% to 13%. Meanwhile, the American market saw impressive growth, with revenue increasing from 13% in Q1 FY23 to 19% in Q1 FY24. Finally, the rest of the world experienced an increase from 6% to 10%, suggesting potential opportunities for expansion in diverse international markets.
Capex Update for Q1 FY24
During the quarter, the company invested Rs. 90 crores in capital expenditures. Of this amount, Rs. 85 crores were allocated to the subsidiary CFCL. All capex expenses were covered through internal accruals. The construction phase at Clean Fino-Chem Limited has been completed, and activities such as equipment installation and pipe fitting have commenced at CFCL. Progress is on track as planned.
Business Environment Trend & Outlook
The company highlighted the evolving business environment, contrasting it with the previous year. While the prior year was marked by high inflation, supply chain disruptions, increased freight rates, and geopolitical tensions, the current year has seen benign inflation, a stable supply chain, and geopolitical stability. Consequently, raw material and end-product prices are correcting compared to the higher prices of the previous year. This shift has transformed the market from a seller’s market to a buyer’s market, favoring companies with better technology, backward integration, and cost-efficient structures.
Clean Science & Technology anticipates a gradual recovery throughout the year, with demand expected to stabilize in the first half of the fiscal year. Challenges include declining raw material and fuel prices, coupled with a slowdown in demand. However, the company is committed to enhancing yields and operational efficiencies while focusing on its strong R&D pipeline to diversify its product portfolio and expand its geographical presence.