Hello Sir,

Hope you are doing well.

One of my favorite Peter Lynch quotes is - The person that turns over the most rocks wins the game.

This is so true for investing, especially if you invest in small-mid cap stocks.

There are so many opportunities around; however one does have to keep running various screens and scout for potential stock investment opportunities.

Recently, we came across Excel Industries which is a major agrochemical intermediate maker. The numbers looked decent and we decided to dig deeper. Below, we have shared notes from the Apr'22 Crisil rating report on the company.

Hope you find the details useful in your search of investment opportunities.


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Excel Industries - Notes from Apr'22 Crisil Rating report

- Incorporated as a private limited company in 1960, Excel was reconstituted as a public limited company in 1971. Following the de-merger of its crop protection business from its former associate, Excel Crop Care Ltd, Excel began manufacturing chemical intermediaries used in agrochemicals, commodity polymers, engineering polymers, soaps and detergents, water-treatment chemicals, and biocides.

- The company started as an agrochemical intermediate manufacturer and has expanded its product portfolio over the years by leveraging its process chemistry capabilities in other segments, such as performance and specialty chemicals, polymer additives, and pharma inputs.

- Performance and specialty chemicals cater to diverse segments, such as soaps and detergents, water treatment, and paints and coating. The company has also entered the polymer additives and pharmaceutical inputs segments to diversify revenue and reduce dependence on agrochemicals.

- DETC (di-ethyl thiophosphoryl chloride) had about 36% share in overall revenue in the nine months ending December 2021, which exposes the company to product concentration risk.

- DETC finds application in making chlorpyrifos (CPP) and Profenofos, which are agrochemical technical used in making pesticides. Out of the two, use of CPP is under review by the Central Insecticides Board.

- However, currently only ~50% of DETC sales are used for CPP, and this contribution is on a declining trend, which partially offsets the product concentration risk.

- Further, contribution from non-agrochemicals segments which is on a rising trend,(currently at 45% of revenues in 9M FY 22 vis-a-vis 34% of overall sales in fiscal 2018) is expected to reduce the concentration risk going forward.

- Planned capacity expansions have been completed in Q4 FY 22, which will also help drive the growth going forward. In an effort to reduce dependence on DETC, EIL has been diversifying into other business segments focused towards specialty chemicals, including pharma intermediates and polymers.

- CRISIL Ratings also notes that risks associated with any ban on chlorpyrifos, a key agrochemical produced using DETC, will remain key monitorables over the medium term given its considerable contribution to Excel’s revenue.

- CRISIL Ratings believes that any decision to ban chlorpyrifos is likely to be implemented in a phased manner considering the wide usage of the chemical both in the domestic as well as global markets.

- Further, EIL has also been reducing its DETC exposure for use of chlorpyrifos by focusing on DETC sales to non-chlorpyrifos segments and have also diversified into specialty and environmental product segments.

- Company had cash surplus of Rs 75 crore as of 30 Sep, 2021. Further, annual cash accruals are expected to be in the range of Rs 180-200 crore per fiscal in fiscals 2022 to 2024, against negligible term debt obligation.





Disclaimer: This is not a recommendation to buy/sell Excel Industries. These notes are as announced by the companies on exchanges and only for the purpose of information and education.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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