POCL Delivers Stellar Performance, Charts Aggressive Growth Course

Pondy Oxides & Chemicals Ltd (POCL) reported impressive financial performance with a 37% YoY revenue increase and a staggering 216% YoY jump in PAT. POCL is making significant strides in the recycling industry, as discussed in their recent earnings call. The company is embarking on a strategic expansion, increasing lead production capacity by 55% and establishing new facilities in Tamil Nadu and Gujarat. POCL’s operational excellence is evident with a 38% reduction in finance costs YoY and substantial growth in lead production and sales.

The company is diversifying into plastics recycling with impressive QoQ growth and exploring value-added aluminum alloys. Financially, POCL aims to boost its EBITDA margin from 5-6% to 7-7.5% over the next three years while targeting a 20% return on capital employed.

With a balanced approach to domestic and export markets, POCL is well-positioned to capitalize on the growing circular economy trends and upcoming regulatory opportunities in EPR (Extended Producer Responsibility). This multifaceted strategy underscores POCL’s commitment to sustainability and operational efficiency in the evolving recycling landscape.

Key Takeaways :

• Strategic Capacity Expansion
  • Increasing lead production capacity by 55% (132,000 to 204,000 metric tons)
  • Expanding lead production capacity with new plant commissioning in phases
  • New facility in Thervoykandigai, Tamil Nadu, production starting Q4 2025
  • Funded through preferential issue and internal accruals
  • Smelting capacity to double from 80,000 to 160,000 metric tons
• Operational Efficiency
  • 38% reduction in finance costs YoY
  • Lead production up 38%, sales up 46% YoY
  • Consistent 60% share of value-added products in lead segment
  • Focus on backward integration to improve margins
  • Moving towards more battery recycling vs. direct refining of lead scrap
• Geographical Expansions
  • 123-acre land acquisition in Mundra, Gujarat
  • Proximity to port offers cost efficiencies in imports/exports
  • Positions POCL to tap Western regions and international markets
  • 60-65% of exports directed to East Asian countries
• Financial/Operational Targets
  • Targeting overall EBITDA margin increase from 5-6% to 7-7.5% over next 3 years
  • Targeting 60%+ share of value-added products
  • Projected 15% volume growth in coming years
  • Targeting 20% return on capital employed
  • Exploring forward integration opportunities in aluminum
  • Compounding segment target margins at 12-14%
  • Lead business margin expected to improve by 120-150 bp
• Diversification to Plastics Recycling
  • 47% QoQ growth in plastics segment
  • Current plastics recycling margins at 6-8%
  • Expanding from recycled to compounded products (C080, filler grades, nylon, ABS)
  • On track for INR50 crore revenue target in plastics
• Strong Partnerships
  • 25-30% of domestic sales attributed to major customer Amara Raja
  • Renewed contracts despite Amara Raja’s backward integration
  • Potential for increased alloy sales as Amara Raja focuses on pure lead production
  • Top 5 customers constitute 40-50% of total revenue