GHCL Limited

In Q4 FY24, GHCL Limited reported a revenue of ₹840 crores, a decrease from ₹1,140 crores in the same quarter last year but an increase from ₹813 crores in Q3 FY24. The EBITDA for the quarter was ₹201 crores, down from ₹371 crores year-on-year but up from ₹165 crores sequentially. The EBITDA margin stood at 23.9%, compared to 32.5% in Q4 FY23 and 20.3% in Q3 FY24. This sequential improvement was attributed to higher sales volumes and reduced input costs, indicating a recovery trend despite the overall lower performance compared to the previous year.

During GHCL Limited's Q4 FY24 earnings conference call on May 7, 2024, key highlights included a revenue of ₹840 crores, reflecting a 9% CAGR growth from FY2019 to FY2024. The EBITDA stood at ₹201 crores with a margin of 23.9%. The company reported a profit after tax (PAT) from continued operations of ₹124 crores and a cash profit after tax of ₹662 crores for FY24. Notable achievements included the installation of 6.7 megawatts of renewable energy and progress on greenfield projects in soda ash and vacuum salt. Looking ahead, GHCL anticipates improved demand recovery in India and aims to enhance production efficiency while addressing challenges posed

Insights shared during GHCL Limited's earnings call indicate a positive outlook for soda ash demand growth in India over the next few years. The company anticipates a recovery in demand, projecting a growth rate of approximately 2.7% for the Indian market, driven by stronger demand in end-user segments like detergents and chemicals. Despite current challenges from global oversupply and increased imports, GHCL expects that the Indian market will see improved sentiment and demand recovery next year. This is supported by the company's strategic initiatives, including capacity expansions and sustainability efforts, which aim to enhance production efficiency and meet the anticipated growth in domestic demand.

GHCL Limited's future growth plans focus on enhancing production and cost competitiveness while prioritizing sustainability. The company is progressing on its greenfield soda ash project and a vacuum salt project, with expectations of obtaining final approvals soon. Additionally, GHCL is exploring a new bromine project at its existing salt works and increasing sodium bicarbonate capacity to boost sales and margins. In terms of capital allocation strategies, GHCL emphasizes long-term growth over short-term market fluctuations. The management believes in investing in projects that promise a strong internal rate of return (IRR), projected at over 16% for the greenfield project. This approach aims to balance shareholder rewards through dividends and potential buybacks with sustainable growth initiatives, ensuring the company remains competitive in the evolving market

GHCL Limited is proactively addressing challenges related to increased imports and pricing pressures in the soda ash market through strategic measures. The company is implementing cost control measures and enhancing operational efficiency to mitigate the impact of oversupply from imports, particularly from Turkey, the USA, and Russia. Additionally, GHCL is focusing on long-term growth by investing in projects that promise strong returns, such as its greenfield soda ash project and capacity expansions in sodium bicarbonate. By prioritizing sustainability and production competitiveness, GHCL aims to navigate current market challenges while positioning itself for future demand recovery in India.

The oversupply situation in the global soda ash market, as discussed in GHCL's earnings call, is primarily attributed to increased imports from Turkey, the USA, and Russia. This influx has led to a significant rise in global capacity, with an estimated addition of 9 to 10 million metric tons in 2023 alone. Consequently, this oversupply has exerted downward pressure on pricing and margins, creating a challenging environment for producers. Additionally, geopolitical uncertainties have disrupted global supply chains, further complicating the market dynamics. Despite these challenges, GHCL anticipates a recovery in demand within India, which may help rebalance the market in the coming years.