Categories Earnings, Other Industries, Research Summary

Pondy Oxides & Chemicals Q3FY23 Earnings Story

Company Description:

Incorporated in the year 1995 and headquartered in Chennai, Pondy Oxides and Chemicals is India’s leading non-ferrous recycling company and the largest secondary lead metal manufacturing company in India. The company recycles lead, copper, zinc and plastic in various forms.

The firm has established, POCL Future Tech Private Limited as a subsidiary business, and it will engage in business in areas such as plastics, where it will use its own and other industrial plastics, e-waste, lithium ion recycling, rubber, oil, glass, paper, and other value-added products.

Financial Results:

Pondy Oxides reported a QoQ rise in its revenues of 24 percent. On a yearly basis, it reported a 18% drop in the net profit from ₹ 1,413 lakhs in Q3FY22 to ₹ 1,163 lakhs in Q3FY23. This happened on account of 10% fall in the total revenue of the company to ₹ 37,264 lakhs on an YoY basis. The company has managed to bounce back and provide improved financial performance compared to the previous quarter.

Financial Performance Ratios:

The PAT Margin in Q3FY23 has decreased to 3.12% from 3.41% in Q3FY22. The decrease in profitability margins can be partly contributed to rise in expense margins. Total Expenses as % of Revenues from Operations in Q3FY22 was 95.5% while in Q3FY23 it has increased to 95.85%. On an YoY basis, the decrease in PBT were marginally higher compared to PAT. This is due to the improvement in the Tax Margin (Total Tax Expenses as % of Revenues from Operations) of the company which has been brought down from 1.4% in Q3FY22 to 1.1% in Q3FY23. All margins are presented below in a tabular form:

Financial Margins Q3FY23 vs Q3FY22 (%)Q3FY23Q3FY22
Expense Margin95.85%95.5%
PBT Margin4.2%4.8%
Tax Margin1.1%1.4%
PAT Margin3.12%3.41%

Management Outlook:

So the last quarter, subsuming into the full financial year is going to be marginally on the positive side in line with the results of the previous financial year for both top and the bottom line. This year has been exceptional in terms of witnessing various factors of geopolitical issues, increase in prices of raw materials across the industry, volatility in pricing and markets. And despite all the aforementioned factors, the company has witnessed stable technical and fundamentals. We have seen the stability and growth in the January 2023 sales and production.

– Vijay Balakrishnan,Chief Financial Officer

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