Table of Contents
Sector Outlook: Netural
Consistently delivered better operating performance
GHCL reported a 1.6% YoY and 4.5% QoQ revenue decline to ₹7,928 mn, primarily due to lower realization and reduced volumes from annual plant maintenance. With maintenance now complete, production should normalize next quarter. EBITDA dropped 1.2% YoY and 2.7% QoQ to ₹2,110 mn, with an expanded margin of 26.6% due to cost control. Net profit rose 8.4% YoY and 2.8% QoQ to ₹1,548 mn, with a PAT margin of 19.5%. Despite global market challenges and higher imports, GHCL delivered a resilient quarter. Soda ash prices may remain steady amid ongoing industry challenges and geopolitical risks.
Key Concall Highlights
Soda Ash Market Outlook
Demand for soda ash remained subdued in the US, Europe, and LATAM markets. China’s demand has been decent, and reasonable growth is expected. The company expects the situation to prevail for the next two quarters.
Pricing Pressure
The company expects pricing to remain range-bound due to ongoing global industry challenges. Geopolitical uncertainties may potentially hurt demand and pricing worldwide. The company is focused on efficiency improvements, which will continue to benefit the business, partly offsetting the impact of market dynamics on prices.
Cost optimization
Significant improvement in power and fuel costs has been observed during the quarter. This can be attributed to operational efficiency and market dynamics. The company feels this will be the scenario going forward, and cost savings will continue.
End-user Segment
The demand for solar glass will increase next year due to new investments in green hydrogen and solar glass projects. The company believes that the demand for green hydrogen in India will grow significantly due to the need for solar glass. The company is confident that there will be a 5% to 6% demand recovery or more in the solar glass segment next year.
Capex
The company is looking to spend around Rs. 200 crores to Rs. 250 crores on capital expenditures for FY25, with Rs. 172 crores already spent in the first six months. Of this, Rs. 63 crores is for greenfield projects and Rs. 109 crores is for current operations.
Key Growth Areas
GHCL is progressing with planned growth endeavours, including various projects and capacity expansions, which are underway and will augment capability and drive benefits in the future. The new project initiatives remain on track, with contributions from vacuum salt and bromine starting to flow in from FY26. The greenfield project for soda ash has a capacity of 5.5 lakh tons in two phases, and a new land parcel for salt and bromine is underway.
Other Highlights:
- The company has ambitious plans related to bromine. They intend to penetrate the market and also get into bromine derivatives in the future.
- China’s announcement of economic stimulus to revitalize the real estate sector, along with rate cuts in the US and Europe are positive signs for soda ash demand.
- The company is bullish on solar glass consumption, driven by the growth of green hydrogen capacities.
Valuation and Outlook
GHCL delivered a resilient quarterly performance, focusing on operational efficiency, even as global soda ash markets face mixed demand and range-bound pricing due to geopolitical risks and a slowdown in China. While increased net imports impacted soda ash, demand remains strong in specific sectors. India’s possible halt on new FGD units could limit sodium bicarbonate growth. However, the government’s 10% import duty on solar glass is set to boost domestic soda ash demand sustainably. GHCL’s growth outlook is further supported by upcoming expansions in vacuum salt and bromine, set to contribute from next year.
