Chemfab Alkalies zooms 77% in 5 weeks on strong business outlook

With the focus of both the Central as well as State Governments on water connectivity and distribution, the company expects demand for the PVCO pipes to be robust.

Shares of Chemfab Alkalies hit over four-year high of Rs 297.20, up 5 per cent on the BSE on Thursday. The stock of commodity chemicals locked at upper circuit for the fourth straight day. In the past five weeks, it has zoomed 77 per cent from Rs 167.80 touched on July 21, on strong business outlook.

Chemfab Alkalies is in the business of manufacturing basic inorganic chemicals and PVCO pipes. The stock traded at its highest level since April 2018. It hit a record high of Rs 314.95 on April 25, 2018.

For April-June quarter (Q1FY23), Chemfab Alkalies reported 67 per cent jump in consolidated net profit to Rs 21.34 crore, sequentially. On year-on-year (YoY) basis, the profit soared nearly seven-fold from Rs 3.06 crore in Q1FY22. Revenue from operations more-than-doubled to Rs 98.11 crore in Q1FY23 from Rs 47.04 crore, in a year ago period. The company had posted revenue of Rs 88.09 crore in the March quarter.

Chemfab Alkalies completed three years of operation in the PVCO pipes business. This segment was significantly impacted by the pandemic during the last two years, which were the crucial years in the stabilization of the division.

During the ensuing year, the company expects significant improvement in order inflows, especially during the second half. The company has created higher capacities to cater to enhanced demand and expects PVCO pipes segment to show substantial growth in the coming years.

“With the focus of both the Central as well as State Governments on water connectivity and distribution, the demand for the product is expected to be robust. As of now PVC-O Pipes have been accepted both in both the Government and non-Government projects and with the proven track record, we expect good growth in market demand,” Chemfab Alkalies said in their FY22 annual report.

Meanwhile, the company’s wholly owned subsidiary, Chemfab Alkalis Karaikal, will commence construction activities in the coming year for its Greenfield project at Karaikal, Puducherry where the pre-construction activities for250 TPD caustic soda plant along with a 10000 TPA aluminium chloride plant are progressing.

"The capacity addition build-up in the domestic industry is likely to have an impact in the domestic market prices. While the demand for the product is only growing, the industry needs to work on increasing its exports to maintain the demand balance. Alumina in India and across the globe continues to be a big demand driver for caustic soda, with sustained demand. However, the geopolitical issue continues to be a major threat," the company added.