Pondy Oxides And Chemicals Limited, a secondary lead smelter company, produces and sells lead metals and alloys, and zinc metal and oxides in India. It also provides master, tin, and babbit alloys, as well as PVC additives. The company primarily serves battery and chemical manufacturers, as well as PVC extruded and molded products. It also exports its products to Japan, South Korea, Thailand, Indonesia, the Middle East, and internationally. The company was incorporated in 1995 and is based in Chennai, India.

India

Pondy Oxides And Chemicals Limited

Basic Materials

The company pays dividends most of the time. It has paid dividends in almost every one of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. On average, the company pays dividends annually. 

POCL.BO reported revenue of INR 18 947mn in the last 12 months, up 17% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 20% from FY23 to INR 21.18.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 45ppts and its growth decelerated by 18ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 5.2% in the last 12 months, a decline from 6.7% in FY23. 

Historically, POCL.BO has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.8%, down from 3.8% in FY23. 

Pondy Oxides And Chemicals Limited reported a return on equity (RoE) of 14.2% in the last 12 months, down from 19.7% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 10.1% in the last 12 months, a decrease from 12.9% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 14.1%, above the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.9 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

POCL.BO has very poor trading liquidity. It will take several trading days for the average private investor to sell a common position under normal market conditions. Liquidity is relatively stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note solid return on capital, low margin volatility, strong debt servicing capacity, solid cash flow generation, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, and poor working capital management.

In highly turbulent market conditions, POCL.BO is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, POCL.BO is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from moderate to notable. We would also like to highlight the notable intraday volatility of the instrument. 

Considering past and projected metrics, the stock is 'expensive' compared to its peers. In particular, the stock is reasonably priced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

Pondy Oxides And Chemicals Limited

₹ 561.65

3

Pondy Oxides And Chemicals Limited

₹ 561.65

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

₹ 561.65

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