At a Glance
IG Petrochemicals is India’s largest manufacturer of Phthalic Anhydride (PAN) — used in everything from paints to perfumes. Once a high-margin, debt-free darling, the last three years have been a chemical spill of collapsing margins, volatile earnings, and muted returns. Yet at ₹476, the stock trades at just 13x earnings with a ~1.6% dividend yield. So… is it a hidden gem or just a tired molecule?
1. 🧲 Introduction – From Hero to Hydrocarbon Hangover
If you’re the largest player in your niche (Phthalic Anhydride) and your ROE is still below 9%, something’s cooking — and it’s probably Maleic Anhydride.
IGPL used to mint money during 2021–22 commodity spikes, but it’s now struggling with inflation, Chinese dumping, and sluggish downstream demand from resins, plasticizers, and paints.
The FY25 rebound looks promising… but let’s not lose molecules over momentum just yet.
2. ⚗️ WTF Do They Even Do?
Product Lineup:
- Phthalic Anhydride (PAN) – core product, used in plasticizers, alkyd resins, pigments
- Maleic Anhydride (MAN) – PAN byproduct, industrial intermediate
- Benzoic Acid – used in food preservatives, perfumes, pharma
- Di-Ethyl Phthalate (DEP) – PAN derivative, used in incense sticks, cosmetics, and personal care
Basically, they break hydrocarbons, and in the process, your portfolio either compounds… or combusts.
3. 📉 Financials – From Boiling to Simmering
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales | ₹2,352 Cr | ₹2,099 Cr | ₹2,206 Cr |
| EBITDA | ₹318 Cr | ₹105 Cr | ₹221 Cr |
| Net Profit | ₹200 Cr | ₹40 Cr | ₹112 Cr |
| EPS | ₹65.05 | ₹12.89 | ₹36.52 |
| ROE | 17% | 3.3% | 8.8% |
After peaking in FY22–23, both sales and margins tanked. FY25 is showing signs of revival — but nowhere near its former glory.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹476
- EPS (FY25): ₹36.5
- P/E: ~13x
- Book Value: ₹431 → P/B = 1.1x
🧮 Fair Value Range: ₹400 – ₹530
Based on 10x–14x EPS and stable ROE of ~9%. No premium for growth (yet), but not screamingly undervalued either.
Not a deep value bet, not a growth rocket — it’s the Goldilocks of chemical midcaps right now.
5. 🔬 What’s Cooking – PAN, MAN & New Capex?
- 🧪 Recovery in PAN spreads: China’s overcapacity hurt prices, but stabilizing now.
- 🏭 New Capacity Utilization: Still scaling MAN and DEP volumes.
- 🎙️ May 2025 Concall: Management hinted at better margin profile in FY26, but cautious on demand.
- 🧴 Focus on downstream specialty expansion rather than just being a bulk PAN supplier.
But until pricing power returns or demand spikes from infra/resins, it’s slow brewing.
6. 💼 Balance Sheet – Solvent or Strained?
| FY25 |
|---|
| Equity Capital: ₹31 Cr |
| Reserves: ₹1,297 Cr |
| Debt: ₹238 Cr |
| Total Liabilities: ₹2,168 Cr |
- Debt is up from ₹137 Cr (FY22) to ₹238 Cr now — likely to fund CWIP & downstream expansion.
- Still a manageable D/E < 0.2x
- No red flags… but no party either.
7. 💵 Cash Flow – Healthy Recovery
| FY25 |
|---|
| CFO: ₹265 Cr ✅ |
| CFI: ₹-88 Cr |
| CFF: ₹-136 Cr |
| Net Cash Flow: ₹41 Cr |
Free cash flow is solid again after last year’s slump. Despite heavy capex in FY23–24, the company has maintained dividend payouts and avoided equity dilution. Rare in chemicals!
8. 📊 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 12% |
| ROE | 8.8% |
| OPM | 10% |
| Interest Coverage | ~5x |
| Inventory Days | 64 |
| CCC | 13 Days ✅ |
Margins are still recovering. If they push OPM back to 14–16%, ROE should jump back into double digits.
9. 🧾 P&L Breakdown – Where’s the Margin?
- PAN still forms >80% of revenue
- FY25 EBITDA margins: 10% vs 22% in FY22
- Net profit margins down to ~5%
- Cost pressures, lower realizations, and higher fixed expenses post capex were the triple whammy
Unless PAN prices firm up or DEP/MAN contribute 25%+ of revenue, margin expansion will be slow.
10. 🧬 Peer Comparison – Who’s the Alpha Acid?
| Company | P/E | ROE | OPM | Mcap |
|---|---|---|---|---|
| Deepak Fertilizers | 23.5x | 16% | 18.7% | ₹21,976 Cr |
| GHCL | 9.8x | 18.6% | 27.5% | ₹5,928 Cr |
| GNFC | 13.8x | 7% | 7.8% | ₹8,245 Cr |
| IGPL | 13x | 8.8% | 10% | ₹1,467 Cr |
They’re still among the smaller players, but margins and cash flows are better than several midcaps. GHCL and Deepak remain margin monsters.
11. 🧾 Misc – Promoters, Holding & Liquidity
- Promoter Holding: 68.74% — unchanged for years
- FII Holding: Just 3.09%
- Retail: 26.7% (cult following?)
- Dividend Payout: 27% in FY25 — better than many peers
Shareholder base is loyal, but it won’t re-rate unless growth or specialty revenue kicks in.
12. 🧠 EduInvesting Verdict™
“India’s PAN King — but stuck in a margin trap.”
- ✅ Leader in Phthalic Anhydride
- ✅ Debt-light, cash-generating
- ✅ Undervalued vs peers
- ❌ Lacks pricing power
- ❌ No meaningful diversification yet
It’s a cyclical chemicals stock trying to do a specialty pivot. If PAN prices hold up and they ramp up downstream DEP/MAN, you might get 2–3 good years. Otherwise, welcome to sidewaysville.
🎯 Not spicy enough for momentum bros. Not safe enough for boring investors. But perfect for patient ones watching crude prices and resin demand.
✍️ Written by Prashant | 📅 July 3, 2025
Tags: I G Petrochemicals, PAN Manufacturer India, Chemicals Midcap, IGPL Analysis, Phthalic Anhydride Stock, Maleic Anhydride, Specialty Chemicals India, EduInvesting, FY25 Chemical Earnings, Downstream CAPEX Stocks
