Company Update : Himadri Speciality Chemical Ltd by Prabhudas Liladhar Capital Ltd
New projects to drive next leg of growth
Quick Pointers:
* High-Value Coal Tar Derivatives to commercialized in Q2FY27
* Birla Tyres: Guidance of Rs35bn revenue and Rs5bn EBITDA by FY30
We attended the analyst meeting of Himadri Specialty Chemical Ltd (HSCL). Management highlighted visibility near-term volume growth driven by the debottlenecking of coal tar pitch (CTP) capacity to 600ktpa and the upcoming expansion of carbon black capacity to 130,000mtpa. The company is progressing on multiple projects, including the anthracene–carbazole value added product line targeted for commissioning in Q2FY27, and the revival of Birla Tyres, where full 400tpda utilization is expected over the next four years. HSCL is also advancing its new-energy materials portfolio, with India’s first 40,000mtpa LFP cathode active material facility expected by Q3FY27 and further scale-up planned thereafter. Additionally, the company is developing anode materials, silicon-carbon technology, and evaluating future opportunities in AHF production through oil, and foraying into specialty agrochemicals. Over FY23-25, HSCL revenue/EBITDA has registered a CAGR of 5%/46%. We believe execution of all the ongoing projects will be keen for the success of the company. The stock trades at 27x based on FY27E consensus EPS. Not Rated
* Volume growth to be visible from this quarter: Coal tar pitch (CTP) remains HSCL’s core business, the company is debottlenecking capacity from 500ktpa to 600ktpa, with the resulting volume growth expected to become visible from this quarter onwards. With ~80% of India steel output still produced through the blast-furnace route, sourcing RM is not issue for the company. In carbon black, the company is undertaking a major capacity expansion, increasing capacity from 60,000mtpa to 130,000mtpa. The project entails a capex outlay of Rs2.2bn, and a planned shutdown on 18th Dec will facilitate integration of the new production line.
* Moving up the value chain through Anthracene and Carbazole: The Anthracene and Carbazole project is expected to be commissioned in Q2FY27 and will enable the company to manufacture high-value products derived from coal tar distillates. These products command attractive realizations, with anthracene priced at around Rs0.2mn/tn and carbazole at Rs0.4mn/tn. Carbazole finds applications in dyes, pharmaceuticals, and photoelectric materials, while anthracene is used to produce anthraquinone, which is widely used across the dye, paper, and wood industries.
* Guidance of Rs35bn revenue and Rs5bn EBITDA by FY30 for Birla Tyres: HSCL has started making progress in reviving Birla Tyres, which they acquired for Rs3.06bn. BCG has been engaged over the past 18 months to revive the plant and streamline the organization. The facility has an installed capacity of 400tpda, though current utilization stands at just 10%; the company expects to reach full utilization over the next four years. The immediate focus is on strengthening its domestic presence, with exports planned as the next phase of growth. Birla Tyres is expected to turn cash positive by April’26. PCR and EV tyres are expected to be launched in next 1.5 years. The business currently has no labour union issues and the management has guided a revenue and EBITDA target of Rs35bn and Rs5bn, respectively, by FY30. Additionally, the project also benefits from strong government support, including 50% capex incentives and ~200% SGST reimbursement.
* LFP battery materials: HSCL is foraying into LFP cathode active materials, with plans to commission India’s first commercial 40,000mtpa LFP plant (Phase-1) by Q3FY27, scaling to 200,000mtpa over the next 4–5 years. This makes HSCL the first non-Chinese integrated player across cathode and anode materials, supported by its pitch-based backward integration. While LFP margins in China are currently subdued, management has indicated early signs of recovery. HSCL is advancing its anode materials business, with a demo plant expected to start by Feb’ 26 and has signed an agreement with an Australian partner to set up India’s first silicon-carbon plant, where realization for the product could reach upto Rs8–10mn/tn.
Please refer disclaimer at https://www.plindia.com/disclaimer/
SEBI Registration No. INH000000271
