🧠 At a Glance
Once a cash-gushing commodity chemical king, Gujarat Alkalies & Chemicals Ltd (GACL) is now basically a cautionary tale dipped in chlorine. Despite over ₹4,000 Cr in FY25 revenue, net profit fell harder than a chemical reactor during shutdown — ₹-65 Cr loss with ROE of -1.1%. Meanwhile, the stock trades below book value. Bargain or Value Trap? Let’s dunk this in some hydrochloric sarcasm.
1. 🚨 Intro: The OG of Alkalies – Now Acidic?
Founded as a PSU powerhouse in Gujarat, GACL was once the envy of every chemical engineering student’s resume dreams.
Fast forward to 2025: profits vanished, margins shrank, and if it weren’t for solar project PR, you’d forget this company still existed.
From 30%+ OPM in FY22 to just 7% now, it’s not a cycle — it’s a crash test.
2. 🏭 WTF Do They Even Do?
GACL makes everything your chemistry teacher warned you about:
- Caustic soda (lye, flakes, prills)
- Chloromethanes
- Liquid chlorine
- Hydrogen peroxide
- Anhydrous aluminium chloride
- Phosphoric acid
- Water treatment chemicals
And yes, they also sell hope to shareholders with every concall.
3. 📉 Financials – Profit? Acid Wash Kiya Kya?
| Metric | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|
| Revenue | ₹3,759 Cr | ₹4,516 Cr | ₹3,807 Cr | ₹4,073 Cr |
| Net Profit | ₹560 Cr | ₹410 Cr | ₹-237 Cr | ₹-65 Cr |
| OPM % | 26% | 21% | 1% | 7% |
| ROCE | 13% | 11% | -4% | -0.3% |
OPM collapsed faster than a beaker under vacuum. FY25 is a “slight recovery”, but honestly, it still feels like treating third-degree burns with Dettol.
4. 📦 Valuation – Cheap Chemical or Poisoned Pickle?
- CMP: ₹608
- Book Value: ₹772 → Price/Book = 0.81x
- Market Cap: ₹4,464 Cr
- PE: N/A (negative profits)
- EV/EBITDA: Can’t calculate — EBITDA walked out
✅ Valuation looks attractive
❌ But only if you enjoy value traps with negative catalysts
This is value investing with a side of nerve gas.
5. 🔥 What’s Cooking – Power Costs Down, Still No Spark
- GACL’s 75 MW solar power plant is now fully operational
- This is expected to reduce power costs, which make up a huge chunk of input expenses
- Despite this, operating profit barely touched ₹279 Cr in FY25, compared to ₹984 Cr in FY22
Meanwhile, product realizations remain weak and demand from paper/textile segments isn’t helping either.
6. 🧾 Balance Sheet – Strong or Just Not Eroded Yet?
| Item | FY25 |
|---|---|
| Net Worth | ₹5,669 Cr |
| Total Debt | ₹561 Cr |
| Cash & Investments | ₹2,055 Cr (including CWIP & LT investments) |
| Fixed Assets | ₹4,584 Cr |
The balance sheet is technically okay. But here’s the thing: high capex has yielded near-zero returns in the last 2 years.
How are you spending crores and still leaking profits like a rusty pipeline?
7. 💰 Cash Flow – Chlorinated, Not Clean
| FY25 |
|---|
| CFO |
| CFI |
| CFF |
| Net Cash |
Positive operating cash is the only lifeline here, but it’s not sufficient to justify capex-heavy expansion. Financing is shrinking, which means dividend dreams are going down the drain too.
8. ⚙️ Ratios – Chemistry Joking with You
| Ratio | Value |
|---|---|
| ROE | -1.1% |
| ROCE | -0.3% |
| OPM | 7% |
| Working Capital Days | 21 |
| Inventory Days | 110 |
| Debtor Days | 24 |
The company has textbook working capital control, but who cares when your textbook is torn from the middle and margin pages are missing?
9. 🧾 P&L Breakdown – The Death of Margin
Quarterly net profit in FY25:
- Jun: ₹-44 Cr
- Sep: ₹-18 Cr
- Dec: ₹-11 Cr
- Mar: ₹8 Cr (round of applause pls 🫡)
It took a full year of underperformance to deliver ₹8 Cr of token relief. Can someone check if GACL’s accountant is just rounding everything now?
10. 🧪 Peer Comparison – GACL vs The Rest
| Company | ROE | OPM | PAT FY25 |
|---|---|---|---|
| SRF | 10.4% | 18.5% | ₹1,250 Cr |
| GNFC | 7.1% | 7.8% | ₹597 Cr |
| GHCL | 18.6% | 27.5% | ₹600 Cr |
| Tata Chem | 1.2% | 13.1% | ₹263 Cr |
| GACL | -1.1% | 7.0% | ₹-65 Cr |
Even Chemplast Sanmar (which is bleeding red ink) might soon outrank GACL in earnings per disappointment.
11. 📊 Misc – Shareholding, Dilution, and PSU Drama
- Promoter: 46.28% (Govt. of Gujarat)
- FIIs: 1.71%
- DIIs: 4.17%
- Public: 47.84% → And every investor’s patience is now fully evaporated
Shareholding pattern hasn’t changed. Just investor moods have.
12. 🧠 What Went Wrong?
- High electricity & raw material costs crushed margins post FY22
- Product realization fell while fixed costs kept rising
- CWIP capitalized assets didn’t add commensurate revenue
- PSU governance = great for job security, not so much for nimble decision-making
And despite FY25 improvement, GACL still feels like a slow cooker of regrets.
13. 🧠 EduInvesting Verdict™
GACL is like a periodic table — useful only if you know where to look. Currently, the stock trades at 0.81x book, but that’s not a green flag — it’s an old lab coat pretending to be clean.
Fair Value Range (Speculative): ₹480 – ₹540
(Assumes sustainable ₹300–400 Cr EBITDA and assigns conservative 4–5x EV/EBITDA due to PSU governance drag)
Until pricing improves or demand shocks return, this remains a “Hold and Hope” special, not a high-conviction compounder.
✍️ Written by Prashant | 📅 July 1, 2025
Tags: Gujarat Alkalies, GACL stock, chemical sector India, PSU stocks, caustic soda manufacturers, commodity cycle, undervalued chemical stocks, FY25 results, book value investing
