1. At a Glance
India’s largest Polyisobutylene (PIB) manufacturer, debt-free, ROCE champ, and quietly compounding since 1990. But is this polymer prince finally getting pricing power—or will crude-linked volatility crash its margins like a brittle pipe?
2. Introduction with Hook
Imagine a factory where the pipes don’t just carry oil—they are the oil’s best friend. Welcome to Kothari Petrochemicals Ltd (KPL), the quiet lubricant behind lubricants. With ROCE that makes chemical peers jealous and promoter holding stuck like PIB itself (71%), this Chennai-based player is the largest domestic producer of PIB.
- Market Cap: ₹1,045 Cr
- Stock Price CAGR (5Y): 62%
- ROCE (FY25): 30%
Still niche, still sticky—literally.
3. Business Model (WTF Do They Even Do?)
KPL manufactures Polyisobutylene—a gooey, elastic polymer used in:
- Lubricant additives
- Adhesives
- Sealants
- Fuel & oil additives
- Even chewing gum bases
KPL serves industrials across 20+ countries with focus on low molecular weight PIB, used in high-end specialty chemicals. 100% backward integrated, no imports for feedstock. Their factory in Manali (Chennai, not the stoner’s one) is the operational nucleus.
4. Financials Overview
Key Figures (FY25):
- Revenue: ₹577 Cr
- Net Profit: ₹66 Cr
- OPM: 14%
- EPS: ₹11.19
- ROE: 24%
- Cash from Ops: ₹59 Cr
- Dividend: None in FY25 (stingy much?)
Past 3Y CAGR:
- Sales: 15%
- Profit: 24%
- ROCE: 33 → 30%
- Debt: Essentially nil
In short: profitable, cash-generating, and allergic to debt.
5. Valuation
Let’s break out the DCF goggles and peer-based P/E magic:
| Method | FV Range (₹) |
|---|---|
| DCF (10% disc rate, 15% growth) | ₹215–₹240 |
| P/E Based (15x–18x, FY26E EPS ₹13) | ₹195–₹234 |
| EV/EBITDA (8x FY25 EBITDA ₹95 Cr) | ₹180–₹210 |
Fair Value Range: ₹190–₹235
CMP of ₹178 is close to fair, but not screaming “multi-bagger” unless growth accelerates again.
6. What’s Cooking – News, Triggers, Drama
- Capacity Expansion Whisper? CWIP hints at a ₹80 Cr asset addition in FY25.
- AGM in August: Director reappointment, financial highlights pending—expect commentary on exports.
- Global PIB Prices Fluctuating: Crude-linked input cost risks.
- FII Interest Rising (0.34% stake): Quiet entry by institutions.
- No Dividends in FY25: Despite ₹66 Cr profit—cash is probably going to capex.
7. Balance Sheet
| Particulars | FY25 (₹ Cr) |
|---|---|
| Equity Capital | 59 |
| Reserves | 247 |
| Total Borrowings | 3 |
| Total Assets | 378 |
| Investments | 40 |
| Fixed Assets + CWIP | 213 |
| Net Worth | 306 |
Highlights:
- Zero long-term debt = super clean
- High reserves growth (₹2 Cr in FY14 → ₹247 Cr in FY25)
- Strong internal accruals
- Investments quietly building up
8. Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹26 Cr | -₹26 Cr | ₹5 Cr | ₹5 Cr |
| FY24 | ₹72 Cr | -₹44 Cr | -₹33 Cr | -₹6 Cr |
| FY25 | ₹59 Cr | -₹43 Cr | -₹7 Cr | ₹8 Cr |
Analysis:
- Consistent positive operating cash flows
- Aggressive reinvestment (mostly in capex)
- Dividend drought despite free cash
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 30% |
| ROE | 24% |
| OPM | 14% |
| NPM | 11% |
| Inventory Days | 40 |
| Debtor Days | 33 |
| CCC | 29 |
| Debt/Equity | 0.01 |
Verdict: Financially hot. Inventory days a little sticky—like PIB itself.
10. P&L Breakdown – Show Me the Money
| Metric | FY25 |
|---|---|
| Revenue | ₹577 Cr |
| Op Profit | ₹80 Cr |
| Other Income | ₹11 Cr |
| Interest | ₹1 Cr |
| Depreciation | ₹8 Cr |
| PBT | ₹82 Cr |
| Tax (20%) | ₹16 Cr |
| Net Profit | ₹66 Cr |
| EPS | ₹11.19 |
Not flashy, but consistent like a disciplined Chennai accountant.
11. Peer Comparison
| Company | P/E | ROCE | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM % | D/E |
|---|---|---|---|---|---|---|
| Kothari Petro | 15.9 | 30% | 577 | 66 | 14% | 0.01 |
| Supreme Petro | 42.4 | 22.7% | 6,023 | 369 | 9% | 0.0 |
| Rain Ind | — | 4.5% | 15,472 | -449 | 8.5% | 0.76 |
| DCW | 75.3 | 8% | 2,000 | 30 | 9.6% | 2.2 |
Conclusion:
Kothari is punching above its weight in profitability but under the radar in size. Its valuations are more reasonable than peers like Supreme Petro.
12. Miscellaneous – Shareholding, Promoters
| Category | % Stake |
|---|---|
| Promoters | 70.98% |
| FIIs | 0.01% |
| DIIs | 0.09% |
| Public | 28.92% |
- Stable promoter stake since 2022
- 43,000+ shareholders
- FIIs finally noticed, marginally increasing stake from 0.00% to 0.34% (FY24)
13. EduInvesting Verdict™
Kothari Petrochemicals Ltd is a niche petrochemical compounder that’s been delivering quietly, debt-free, and profit-rich. Its core product PIB isn’t sexy like AI or EVs, but it’s everywhere. ROCE of 30% and strong cash flow show operational excellence. Valuation is fair—maybe even slightly attractive if you believe in PIB’s long-term export potential.
But remember: this is a chemicals business. One crude spike or price war, and OPM can melt faster than PIB in summer.
Watch, don’t blindly worship. Don’t confuse cash flows with cult status.
Metadata
– Written by EduInvesting Analyst | 18 July 2025
– Tags: Kothari Petrochemicals, Polyisobutylene, Chemical Stocks, ROCE Kings, Capex Watch, Dividend Delays
