Meghmani Finechem stock hits upper circuit for fifth consecutive day

Specialty chemicals company Meghmani Finechem Limited (MFL), which made its debut on the stock exchanges on August 18, hit upper circuit on its fifth consecutive trading day on August 25. On BSE, the stock hit Rs 492.95, as against the listing price of Rs 405.65, an increase of 21.5%. The company recently announced its firts set of results as a listed entity. Revenues of the company grew by 111% YoY at Rs 290 crore, driven by higher sales of Chlor-Alkali (up 92%) and its Derivatives (up 170%). Similarly, its EBITDA (earnings before interest tax depreciation and amortisation) margin increased by 190 bps to 31.9%; absolute EBITDA increased by 124% at Rs 92 crore in Q1FY22.

The bottom line or PAT (profit after tax) of Meghmani Finechem increased by 107% to Rs 37 crore with a PAT margin of 12.7%. Derivative (CMS and H2O2) segment contributed 32% to revenue from operations in Q1FY22 compared to 25% in Q1FY21. In Q1FY22, ROCE% improved to 22.3% and ROE improved to 24.8%.

Restructuring

In a business restructuring exercise, Meghmani Organics demerged its agrochemical and pigment divisions into a separate subsidiary, Meghmani Organochem and transferred other businesses of (chloro-alkali and its derivatives business) to Meghmani Finechem (MFL). Meghmani Organochem was renamed Meghmani Organics Ltd (MOL) and the company’s shares got relisted on the exchanges.

As a part of the restructuring process shareholders of Meghmani Organics were allotted 94 fully paid equity shares Meghmani Finechem for every 1,000 fully paid equity shares of Meghmani Organics.

MFL is now expanding its product base to include value-added derivative products like Epichlorohydrin (ECH) and Chlorinated Polyvinyl Chloride (CPVC), which are key raw materials for multiple end-user industries but are currently fully imported. The company is focused on sustainable value creation for all its stakeholders and has recently been awarded the Responsible Care certificate.