1. At a Glance
Punjab Chemicals is a legacy name in agrochemicals and CRAMS, bouncing between pharmaceuticals, performance chemicals, and exports. With FY25 profits slipping and operating margins shrinking, the formula still looks reactive—just not explosive yet.
2. Introduction with Hook
Once a silent operator in the background of India’s agrochemical wave, Punjab Chemicals decided to wear a lab coat, safety goggles, and enter CRAMS, APIs, and exports with a vengeance.
But the script flipped in FY24-FY25:
- FY22 PAT: ₹83 Cr → FY25 PAT: ₹39 Cr
- OPM: Down from 15% to 11%
- Market Cap: ₹1,597 Cr
- Sales stagnating post-peak
It’s profitable, diversified, and debt-controlled—but can it regain reaction velocity?
3. Business Model (WTF Do They Even Do?)
Punjab Chemicals operates across:
- Agrochemicals (bulk actives, intermediates)
- Pharmaceuticals (APIs, CRAMS)
- Industrial & Performance Chemicals
They serve both domestic and 60+ international clients with:
- Multi-step synthesis
- Contract manufacturing
- Custom molecules
- Backward integration
It has 4 manufacturing units (Punjab, Maharashtra, Gujarat) and focuses increasingly on value-added CRAMS and exports.
4. Financials Overview
| FY | Revenue (₹ Cr) | EBITDA (₹ Cr) | OPM% | PAT (₹ Cr) | ROCE | ROE |
|---|---|---|---|---|---|---|
| FY22 | 933 | 140 | 15% | 83 | 45% | 68% |
| FY23 | 1,006 | 123 | 12% | 61 | 31% | 50% |
| FY24 | 934 | 113 | 12% | 54 | 22% | 44% |
| FY25 | 901 | 99 | 11% | 39 | 15% | 32% |
Takeaways:
- Peak margins & profits in FY22
- Decline in profits for 3 years straight
- ROE still double-digit, but momentum fading
5. Valuation
| Metric | Value |
|---|---|
| CMP | ₹1,302 |
| Market Cap | ₹1,597 Cr |
| EPS (FY25) | ₹31.75 |
| Book Value | ₹297 |
| PE (TTM) | 38.2x |
| P/B | 4.38x |
Fair Value Estimate:
- Base Case (PE 20x, EPS ₹35) → ₹700
- Bull Case (PE 28x, EPS ₹45) → ₹1,260
- Bear Case (PE 15x, EPS ₹30) → ₹450
Fair Value Range: ₹450 – ₹1,260
→ Current price is above fair value for a de-growing business.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 results due July 28 – could pivot trend
- Post-results concall scheduled
- Filed Business Responsibility & ESG Report – new institutional focus
- Capex ongoing (assets up from ₹640 Cr to ₹801 Cr)
- Working capital strain increasing – CCC at 110 days
No blockbuster announcements, but clear focus on CRAMS as future growth driver.
7. Balance Sheet
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | ₹12 Cr | ₹12 Cr | ₹12 Cr |
| Reserves | ₹268 Cr | ₹318 Cr | ₹352 Cr |
| Borrowings | ₹94 Cr | ₹123 Cr | ₹168 Cr |
| Total Liabilities | ₹616 Cr | ₹640 Cr | ₹801 Cr |
Key Points:
- Debt increased ~₹75 Cr in FY25
- Reserves stable = retained earnings building
- Asset base increasing = future growth bet?
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹58 Cr | ₹-38 Cr | ₹-20 Cr | ₹0 Cr |
| FY24 | ₹30 Cr | ₹-36 Cr | ₹4 Cr | ₹-2 Cr |
| FY25 | ₹25 Cr | ₹-31 Cr | ₹12 Cr | ₹7 Cr |
Summary:
- Declining cash generation
- Heavy capex outflow
- Financing through debt – not ideal
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 31% | 22% | 15% |
| ROE | 50% | 44% | 32% |
| Debtor Days | 52 | 77 | 95 |
| Inventory Days | 97 | 85 | 151 |
| CCC | 69 | 86 | 110 |
Verdict:
- ROCE halved
- CCC ballooned = cash stuck in ops
- Working capital is choking liquidity
10. P&L Breakdown – Show Me the Money
| Year | Sales | EBITDA | OPM% | PAT |
|---|---|---|---|---|
| FY23 | ₹1,006 | ₹123 | 12% | ₹61 |
| FY24 | ₹934 | ₹113 | 12% | ₹54 |
| FY25 | ₹901 | ₹99 | 11% | ₹39 |
Sales down, PAT down, margins down.
→ Not growth. That’s gravity.
11. Peer Comparison
| Company | Sales (Cr) | PAT (Cr) | ROCE | PE | OPM% | Mcap (Cr) |
|---|---|---|---|---|---|---|
| PI Industries | 7,977 | 1,660 | 22.6% | 37x | 27.3% | ₹62,521 Cr |
| Sumitomo Chem | 3,090 | 502 | 25.1% | 60x | 20.2% | ₹30,255 Cr |
| Dhanuka Agritech | 2,035 | 292 | 28.3% | 27x | 20.5% | ₹8,008 Cr |
| Punjab Chem | 901 | 39 | 15.3% | 38x | 11.0% | ₹1,597 Cr |
→ Underdog, but valued like a champion. Risky proposition.
12. Miscellaneous – Shareholding, Promoters
| Holder Type | Mar 2024 | Jun 2024 |
|---|---|---|
| Promoters | 39.22% | 39.22% |
| FIIs | 3.06% | 2.99% |
| DIIs | 0.55% | 0.54% |
| Public | 57.17% | 57.25% |
- Promoter holding stable, no buying
- Retail is dominant holder
- Institutional interest is token level
13. EduInvesting Verdictâ„¢
Punjab Chemicals is a diversified, export-heavy, CRAMS-exposed story—but one that’s coasting on past growth.
Margins are compressing. Profits are falling. Cash flow is sluggish. And despite all that, it trades at 38x PE.
Unless there’s a big FY26 surprise or capex delivers magic, this remains an overpriced compounder in slowdown mode.
Formula is promising. But maybe wait for the reaction to complete.
Metadata
– Written by EduInvesting Team | 20 July 2025
– Tags: Punjab Chemicals, CRAMS India, Agrochemicals, Contract Manufacturing, Smallcap Chemicals, Export Stories
