GHCL Quarterly Result Update

GHCL in Rough Waters

GHCL, a company involved in manufacturing Soda Ash, didn’t do too well in the second quarter of the fiscal year 2024. Their sales dropped by 31.5% compared to last year and 20.8% from the previous quarter, making Rs. 8,054 million. This drop happened mainly because they were making less money from each unit of Soda Ash sold and their sales volume decreased.

Their earnings before interest, taxes, depreciation, and amortisation (EBITDA) – which is like a measure of their overall business performance – also went down by 47.6% from last year. Their net profit (the money left after paying all their costs) decreased by 50.7% compared to last year and was down 66.5% from the previous quarter.

The global market for Soda Ash isn’t very strong right now, but GHCL is starting to see some signs of improvement in the Indian market, especially from sectors related to the environment like solar glass, lithium carbonate, and sodium bicarbonate, which is used for cleaning gases.

Looking ahead, they expect the price of Soda Ash to stay low for the next 1-2 quarters because of slow demand growth and new supplies entering the market. However, they hope things will get better due to increasing demand from environmentally focused sectors.

GHCL is facing challenges with low prices due to cheap imports from Russia and Turkey. Even though their costs might go down, the impact of lower selling prices might be more significant. To meet the increasing demand in India, they are working on a new project to expand their production capacity, which will make them the largest Soda Ash producer in the country.

The overall demand for Soda Ash is expected to remain weak in the near future, partly because GHCL had to shut down for maintenance in October. The Soda Ash market is currently oversupplied in some regions, leading to lower prices.

In the long run, they expect the demand for Soda Ash to remain strong, especially from industries like solar glass and lithium. They predict a significant increase in demand for lithium in the next few years.

GHCL is focusing on growth areas like producing vacuum salt using waste energy and increasing their sodium bicarbonate production capacity. They also noted that China might reduce its international trade presence to focus more on its domestic market, and that soft demand trends are seen globally, including in the Americas, China, and Europe. This could affect their business performance, as Turkey is aggressively exporting Soda Ash to Asian markets.