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HDFC Securities Retail Research
Gujarat Alkalies and Chemicals Ltd. is the second-largest player in the domestic caustic chlorine industry with integrated operations. It produces a wide range of products, including caustic soda, liquid and gaseous chlorine, hydrogen peroxide, phosphoric acid and aluminium chloride, which find application across a diversified group of industries, including textile, pulp and paper, aluminium, detergents, soaps, rayon, plastics, pharmaceuticals, water treatment, and agricultural chemicals.
Gujarat Alkalies derived 45% of revenue from caustic soda, 9% from chloromethane, 7% from caustic potash, 8% from hydrogen peroxide, 7% from phosphoric acid, 9% from aluminium chloride and the balance from others in FY22.
Company registered strong revenue and robust growth in profitability led by healthy volume growth and robust realisations. In Q1 FY23, the company posted strong set of numbers on the back of better realisations.
We think that given the commissioning of forward integration projects, expansions, power saving initiatives and National Aluminium Company Ltd. joint venture could lead to scale economies/operating leverage and a rerating of the stock in addition to earnings expansion despite a largely commodity portfolio.
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