MOL - Meghmani Organics Limited Share Price

The management of Meghmani Organics provided an optimistic outlook, highlighting recovery in core segments and strategic initiatives:

1. Crop Protection & Pigments:

• Crop Protection saw robust growth (72% YoY revenue, INR 410.5 crore) driven by improved demand, product mix, and reduced channel inventory globally. Margins rebounded to 15% EBITDA (vs. 1.2% YoY), expected to sustain at 14"“16% with new product launches (e.g., Pymetrozine, Ethiprole) and capacity utilization rising to 78%. Growth momentum is expected to continue, supported by U.S./Latin America recovery.
• Pigments revenue grew 40% YoY (INR 147 crore) with EBITDA of INR 5.2 crore. Margins remain pressured due to unorganized competition, but gradual improvement is anticipated.

2. Titanium Dioxide (TiO2):

• Facing losses due to Chinese dumping, but antidumping duty (expected March 2025) is seen as a turnaround catalyst. Current capacity utilization is ~35%; post-duty, revenue could reach INR 250"“300 crore annually.

3. Crop Nutrition (Nano Urea):

• Focus on field trials across states (Gujarat, Rajasthan, UP) and global markets (40+ countries). Early trial orders received internationally. Long-term potential emphasized despite low current utilization (<10%).

Strategic Initiatives:

• Debt Reduction: Aiming to be standalone debt-free by FY26-27.
• Demerger Plans: Evaluating segment demerger (Agrochem, Pigments, TiO2) for value unlocking once segments stabilize.
• New Capacity: INR 400 crore multipurpose agrochemical plant to drive future growth (potential INR 1,000 crore revenue in 2"“3 years).

Risks: Pricing pressure in TiO2, slower Nano Urea adoption, and global agrochemical demand volatility. Overall, management expects double-digit growth in agrochemicals, TiO2 recovery post-duty, and long-term scalability in Nano Urea.

Question: Congratulations for the revival that we have seen in agrochemicals as well as the pigment business of the company. So Ankit, my first question is on the agrochemical itself. So if you can talk about how the industry condition currently, we've seen sharp jump in our margins to almost 15% this quarter. What do you think about the sustainability of these numbers? And how do you see the growth going forward industry-wise as well as our own business prospect, if you can talk about?
Answer: Industry conditions have improved due to reduced global inventory levels, leading to demand recovery. Margins (14"“16% EBITDA) are sustainable as raw material costs stabilize. Growth in agrochemicals is expected to continue with new product launches and geographic expansion.

Question: Sure. So on "“ like we have almost crossed INR 400 crore of revenues in this quarter. So you think this run rate will continue over the next -- in the near to medium term?
Answer: Revenue run rate may fluctuate due to seasonality but growth momentum is expected to continue due to diversified geographies and product mix.

Question: And on the pricing side, if you can talk about like how is the scenario currently? And dumping from China. So what is your view on that?
Answer: Pricing pressure from Chinese dumping persists, but demand recovery and raw material cost reductions may improve margins. Antidumping duties (expected by March 2025) could stabilize prices.

Question: On TiO2 losses: How is the scenario there? What is the outlook for this segment?
Answer: TiO2 faces pricing pressure due to Chinese dumping, but losses are expected to reduce post-antidumping duty (anticipated March 2025). Plant quality is stable, and customer shifts to domestic suppliers have begun.

Question: What is the latest update on antidumping duty for TiO2 from China?
Answer: Antidumping duty on Chinese TiO2 is expected by March 2025, following precedents in Europe (39% duty) and Brazil. Indian manufacturers anticipate relief from price volatility.

Question: What is the traction in the Crop Nutrition segment?
Answer: Nano urea adoption is progressing via farmer education and field demonstrations in states like Gujarat, Rajasthan, and UP. Trials in 40+ countries are underway, with early export orders received.

Question: Why are Pigment margins lower than smaller competitors like Asahi Songwon?
Answer: Competition from unorganized players with lower overheads impacts margins. Focus is on optimizing product mix; no further capex planned for Pigments.

Question: What is the capacity utilization for TiO2?
Answer: TiO2 plant runs at ~35% capacity due to pricing pressures. Full utilization is achievable post-antidumping duty.

Question: What is the revenue potential of the new agrochemical multipurpose plant?
Answer: The INR 400 crore plant could generate ~INR 1,000 crore annually in 2"“3 years, with new registrations driving growth.

Question: What is the debt reduction plan?
Answer: Standalone debt will be eliminated by FY26"“27. No major capex is planned, and operational cash flows will prioritize deleveraging.

Question: Why not demerge Agrochem, Pigments, and TiO2 for value unlocking?
Answer: Demerger plans may materialize once segments stabilize. Current focus is on improving performance across divisions.

Question: What are the revenue and margin expectations for FY25/26?
Answer: Agrochem revenue growth (~20% YoY) and EBITDA margin improvement are expected, driven by demand recovery and new products.

Question: How are Nano urea sales progressing?
Answer: Sales are in early stages (~10% capacity utilization), with trials in export markets. Competition (e.g., Coromandel) is viewed positively for market expansion.

Question: What is the TiO2 revenue contribution in Q3?
Answer: TiO2 contributed ~INR 13 crore in Q3 but is EBITDA-negative. Revenue could reach INR 250"“300 crore annually post-antidumping duty.