1. At a Glance
Manali Petrochemicals Ltd (MPL) is the only Indian manufacturer of Propylene Glycol and the largest domestic player in Propylene Oxide. Recent expansion adds serious production muscle, but profitability and ROE still look anaemic. So… industry moat or just moat ki khabar?
2. Introduction with Hook
Imagine running a marathon… alone. Not because you’re winning, but because no one else showed up.
That’s the story of Manali Petrochemicals in India’s Propylene Glycol scene. They’ve got the first-mover advantage, the only-mover advantage, and even the government’s Atmanirbhar Bharat tailwind. But after hitting profitability highs in FY21–22, they’re now gasping for breath on the earnings track.
- Only Indian manufacturer of Propylene Glycol ✅
- Sales CAGR (5Y): 2% ❌
- FY25 Net Profit: ₹29 Cr, down from ₹381 Cr in FY22 😬
3. Business Model (WTF Do They Even Do?)
Manali Petrochemicals manufactures three core products:
| Product | End-Use |
|---|---|
| Propylene Oxide (PO) | Used in polyurethane foams, lubricants, and surfactants |
| Propylene Glycol (PG) | Food, pharma, cosmetics, and industrial applications |
| Polyols | Crucial for making flexible and rigid foams |
Key Moats
- Sole domestic manufacturer of PG
- Largest Indian manufacturer of PO
- Government push for import substitution in chemicals
Revenue Mix Trends (FY25):
Still heavily dependent on commodity-linked price cycles. Zero FMCG-level pricing power.
4. Financials Overview
Profit & Loss (Consolidated)
| FY | Sales (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) | OPM % | EPS (₹) |
|---|---|---|---|---|---|
| 2021 | 1,024 | 302 | 201 | 29% | 11.70 |
| 2022 | 1,672 | 529 | 381 | 32% | 22.16 |
| 2023 | 1,177 | 74 | 51 | 6% | 2.95 |
| 2024 | 1,032 | 47 | 19 | 5% | 1.12 |
| 2025 | 897 | 58 | 29 | 6% | 1.70 |
Key Callouts
- Margins collapsed post FY22 due to raw material volatility
- ₹381 Cr PAT in FY22 → just ₹29 Cr in FY25
- Still paying 29% of profits as dividends
5. Valuation
Let’s run a quick fair value estimate (P/E multiple basis):
| Basis | EPS (TTM) | P/E Range | FV Range |
|---|---|---|---|
| Conservative | ₹1.70 | 15–18x | ₹25–30 |
| Optimistic | ₹1.70 | 30–35x | ₹50–60 |
| Market Speculation (FOMO PE) | ₹1.70 | 45–50x | ₹77–85 |
Current Price: ₹79.2
Fair Value Zone: ₹25–60
Note: Valuation looks rich based on FY25 earnings. Current PE = 43x 🤯
6. What’s Cooking – News, Triggers, Drama
🔥 Recent Capacity Expansion
- 16 July 2025: 50,000 TPA new Propylene Glycol facility inaugurated
- Aims to cut imports by 50% for India, boost domestic self-reliance
⚙️ Make in India Boost
- Propylene Glycol has massive pharma, food and industrial use
- This expansion could swing earnings big time by FY26
📉 Falling Operating Margins
- From 32% in FY22 to just 6% in FY25
- Rising raw material prices + weak demand = margin crunch
7. Balance Sheet
| FY | Net Worth (₹ Cr) | Borrowings (₹ Cr) | Cash & Inv. (₹ Cr) | Net Debt |
|---|---|---|---|---|
| 2021 | 678 | 14 | 0 | Net Cash |
| 2023 | 1,044 | 7 | 0 | Net Cash |
| 2025 | 1,094 | 129 | 15 | ₹114 Cr Net Debt |
Key Notes
- Became net debt-free in FY21–23
- FY25: Took on ₹129 Cr borrowings (likely for capacity capex)
- Healthy reserves (₹1,008 Cr)
8. Cash Flow – Sab Number Game Hai
| FY | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash Flow (₹ Cr) |
|---|---|---|---|---|
| 2022 | 373 | -16 | -26 | +331 |
| 2023 | 92 | -262 | -64 | -234 |
| 2024 | 63 | -70 | -7 | -14 |
| 2025 | -19 | -155 | -0 | -174 |
Key Insight
- Sharp fall in operating cash flow post FY22
- FY25: Negative operating cash flow = Red flag
- ₹155 Cr capex in FY25 likely went into PG plant expansion
9. Ratios – Sexy or Stressy?
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| ROCE % | 49% | 60% | 8% | 5% | 5% |
| ROE % | 34% | 45% | 5% | 2% | 3% |
| Debt/Equity | 0.02 | 0.02 | 0.01 | 0.02 | 0.12 |
| Inventory Days | 47 | 35 | 47 | 55 | 123 |
| OPM % | 29% | 32% | 6% | 5% | 6% |
📉 ROE/ROCE collapsed post FY22
📦 Inventory Days jumped = unsold stock?
💣 Earnings depend heavily on commodity cycles
10. P&L Breakdown – Show Me the Money
| FY | Sales | Op Profit | Net Profit | OPM % | NPM % |
|---|---|---|---|---|---|
| FY21 | ₹1,024 Cr | ₹302 Cr | ₹201 Cr | 29% | 20% |
| FY22 | ₹1,672 Cr | ₹529 Cr | ₹381 Cr | 32% | 23% |
| FY23 | ₹1,177 Cr | ₹74 Cr | ₹51 Cr | 6% | 4.3% |
| FY24 | ₹1,032 Cr | ₹47 Cr | ₹19 Cr | 5% | 1.8% |
| FY25 | ₹897 Cr | ₹58 Cr | ₹29 Cr | 6% | 3.2% |
Note: OPM crash + revenue de-growth = earnings disaster post FY22
11. Peer Comparison
| Company | CMP (₹) | P/E | ROCE % | OPM % | Market Cap (₹ Cr) |
|---|---|---|---|---|---|
| Supreme Petro | 818 | 41.7 | 22.8% | 8.9% | ₹15,377 Cr |
| DCW Ltd | 76 | 74.5 | 7.9% | 9.7% | ₹2,255 Cr |
| Rain Ind. | 150 | Loss | 4.5% | 8.5% | ₹5,047 Cr |
| Kothari Petro | 178 | 15.8 | 30% | 13.9% | ₹1,046 Cr |
| Manali Petro | 79 | 43.3 | 4.8% | 6.5% | ₹1,363 Cr |
Conclusion:
MPL has a premium valuation (high P/E) despite weak ROCE/OPM. Why? Import substitution hype + capacity boost.
12. Miscellaneous – Shareholding, Promoters
| Shareholder | Jun 2024 | Mar 2025 |
|---|---|---|
| Promoter | 44.87% | 44.87% |
| FII | 1.32% | 0.66% |
| DII | 0.07% | 0.01% |
| Public | 53.74% | 54.47% |
- Zero promoter pledging
- FIIs exiting slowly
- Public interest increasing despite weak fundamentals
13. EduInvesting Verdict™
Manali Petrochemicals is like a one-man army in a chemical war. But just because it’s the only player, doesn’t mean it’s a winner. The company has strong infrastructure, and a strategic product mix, but earnings are volatile, margin recovery is sketchy, and valuation looks like it’s been drinking ethanol instead of logic.
What We’re Watching:
- Can the new PG capacity double revenues in FY26?
- Will margins stabilize or continue to flip like pancakes?
- Will the management focus more on pricing power and less on capacity hype?
Fair Value Range: ₹25 – ₹60
Current Price = Above Comfort Zone
Metadata
– Written by EduInvesting Research | 20 July 2025
– Tags: Manali Petrochemicals, Specialty Chemicals, Import Substitution, Propylene Glycol, Make In India, Capacity Expansion, Earnings Collapse, Commodity Cycles
