At a Glance
Over the last 5 years, Epigral (formerly Meghmani Finechem) has transformed from a humble caustic soda maker into a serious player in India’s specialty chemicals space. With ₹2,550 Cr in FY25 revenue, 28% EBITDA margins, and ₹357 Cr in profits, it’s no longer content being a midcap sidekick. But is the stock, now trading at ~22x earnings, still a buy?
1. A Tale of Two Businesses: From Chlorine to CPVC
When your old name has “finechem” and your new one sounds like a Marvel villain, you better live up to the hype. Thankfully, Epigral does — it’s moved beyond bulk chlor-alkali to high-margin, backward-integrated specialty chemicals.
Revenue Mix Evolution:
| Year | Caustic + Basic Chemicals | Derivatives + Specialty | % Specialty |
|---|---|---|---|
| FY22 | 75% | 25% | 25% |
| FY25 | 44% | 56% | 56% |
That’s not pivoting — that’s full-on business reincarnation.
🧪 Key Specialty Products:
- CPVC Resin & Compounds
- Epichlorohydrin (EPI)
- Chloromethanes (MDC, Chloroform, CTC)
- Hydrogen Peroxide
2. Financial Glow-Up: From Ugly Duckling to Dividend-Spraying Swan
P&L Snapshot (₹ Cr):
| Year | Revenue | EBITDA | PAT | OPM | EPS (₹) |
|---|---|---|---|---|---|
| FY21 | 829 | 261 | 101 | 32% | 24.5 |
| FY22 | 1,551 | 510 | 253 | 33% | 60.8 |
| FY23 | 2,188 | 689 | 353 | 31% | 85.0 |
| FY24 | 1,929 | 481 | 196 | 25% | 47.1 |
| FY25 | 2,550 | 711 | 357 | 28% | 82.7 |
📉 FY24 dip was a speedbump (raw material inflation + demand headwinds), but FY25 came roaring back.
📈 5-Year Sales CAGR: 33%
💰 5-Year PAT CAGR: 26%
3. Capex or Chaos? The Infra Overload
Epigral has thrown cash at capex like Ambani at weddings. And it shows:
- 🏭 CWIP in FY23: ₹158 Cr → FY25: ₹64 Cr
- 🧱 Fixed Assets grew from ₹1,068 Cr in FY22 to ₹2,238 Cr in FY25
- 🧾 Operating Cash Flow FY25: ₹441 Cr vs Capex outflow ₹262 Cr
Net debt is down from ₹964 Cr (FY24) to ₹593 Cr (FY25). So they’re still investing — but doing it smartly.
4. Return Ratios: ROCE Reigns Supreme
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 32% | 17% | 25% |
| ROE | 33% | 17% | 22% |
📌 ROCE bounced back in FY25, thanks to margin recovery and better utilization of new assets.
5. Valuation: Cheap or Justly Priced?
Epigral trades at:
- P/E: 21.8x FY25 earnings
- P/B: 4.0x
- Market Cap: ₹7,686 Cr
Peers:
| Company | P/E | ROCE | OPM |
|---|---|---|---|
| Deepak Nitrite | 37x | 16% | 16% |
| Gujarat Fluoro | 71x | 21% | 25% |
| Atul Ltd | 43x | 13% | 20% |
| Vinati Organics | 48x | 20% | 28% |
| Epigral | 22x | 25% | 28% |
🎯 Fair Value Estimate:
- Based on peer OPM/ROCE, 25–28x P/E seems reasonable
- Fair Value Range = ₹2,070–₹2,316 (based on FY25 EPS ₹82.7)
- CMP: ₹1,782 → 16–30% upside potential
6. Risks: What Could Go Wrong?
😓 Capex Burnout: If demand doesn’t keep pace, ROCE could fall again.
🧪 Product Concentration: CPVC and CMS still form a major chunk.
🌍 Export Volatility: FX, logistics, global demand cycles.
🧮 Interest Burden: While debt is down, rising rates could crimp FY26 margins.
7. The Edu Verdict: Worth a Fresh Look
✅ Capex peak seems behind us
✅ Specialty mix >50% — margin profile is now ‘premium’
✅ ROCE recovery underway
✅ Stock at a discount to all peers
❗ Only catch? Volume growth needs to continue. If FY26 sees even 10% sales growth + flat margins, this becomes a ₹400+ Cr PAT machine.
✍️ Written by Prashant | 📅 June 19, 2025
Tags: Epigral, Meghmani Finechem, Specialty Chemicals, CPVC, Hydrogen Peroxide, Chloromethanes, Chemical Stocks, ROCE, FY25 Results, EduInvesting
