Meghmani Organics Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Meghmani Organics Limited (MOL) Q4 FY22 Earnings Concall

Management Update:

• MOL said that it expects commercial production to come on stream by 2Q23 for the agrochemical division expansion plan project, which will additionally contribute significantly to the topline of MOL going forward.

Q&A Highlights:

• Aman Vij of Astute Investment asked that on the 2,4-D, what was MOL’s utilization levels for FY22 and the capacity now. Ankit Patel CEO answered that MOL’s capacity is 22,000 tons. MOL added that in the first year, the company has been able to utilize the plant by more than 75% capacity.

• Aman Vij of Astute Investment asked about pricing coming down due to Chinese players coming back. Ankit Patel CEO replied that Chinese companies were already there in the market of 2,4-D. But depending on the demand and the market conditions, price keeps on varying. Now it has come down to $3.5.

• Aman Vij of Astute Investment enquired that on the MPP side, if MOL will be introducing mostly insecticides and pyrethroid insecticides only. Ankit Patel CEO said that the company would like to keep it confidential for the time being as MOL is coming with some new gen products.

• Aman Vij of Astute Investment asked that on the agrochem side how much does MOL expect the base business to grow without new products, if it’s 5-6%. Ankit Patel CEO answered that 5%, 6% would be too low. MOL expects at least 10% plus. So MOL will have more growth in the existing product, but the major growth will come from the new product segment.

• Rahul Veera with Abakkus enquired about the MPP plant and when it’s going to be commissioned. Ankit Patel CEO replied that MOL expects to commission the plant by end of 2Q23. So by September, MOL should be able to commercialize.

• Rahul Veera with Absakkus also asked that in 2H23 if the titanium dioxide capacity plus the MPP plant would drive growth. Ankit Patel CEO said that the titanium dioxide Kilburn plant first phase is expected to be commissioned by December, so probably Q4 for the Kilburn chemicals. And for the agro-chemicals, MOL should have nearly 4-5 months’ time.

• Amit Vora from The Homeopathy Clinic asked if MOL is seeing margins improving on the Pigment side further, which came down to 9.3% in FY22 from 18.1% in FY23. Ankit Patel CEO answered that in the Phthalocyanine-based segment where MOL is present; typically, the margin varies in the range of about 12-14%. FY21 was one-off due to favorable market condition and low raw material prices.

• Amit Vora from The Homeopathy Clinic asked if MOL is seeing any foreseeable risk in both the agrochemical and pigment section. Ankit Patel CEO replied that there has been some pressure on raw material price increase and volatility due to global situation. And it has been very challenging coming days.

• Yogansh Jeswani of Mittal Analytics asked that in Kilburn Chemical, once production starts what’s the expected utilization post commercialization. Ankit Patel CEO answered when the plant starts in Q4, initially the utilization is going to be challenging. But for the first year, MOL expects to utilize between 55-60%. And later on, there’s a target to go above 80%.