Carbon, often referred to as the “VIP” of the Periodic Table, holds paramount importance in various aspects of human life. It is ubiquitous, found in everything from plants and pencils to diamonds and even the human body, playing a vital role in our ecosystem.

Himadri Specialty Chemicals stands out as one of the rare fully integrated specialty carbon companies, possessing unparalleled expertise in this versatile element.

Furthermore, the company is strategically pivoting towards the lithium-ion battery sector for future expansion. In line with the surging demand for electric vehicles (EVs), Himadri Specialty Chemicals has unveiled India’s maiden commercial plant for lithium iron phosphate (LFP) cathode active material, a critical component for EV batteries.

Given the pivotal role of lithium-ion batteries in powering EVs and storing energy, they are expected to be instrumental in India’s pursuit of achieving net-zero greenhouse gas emissions by 2070. The company’s recent announcement marks a significant milestone in India’s journey towards sustainable mobility, showcasing its commitment to innovation and environmental stewardship.

The company’s share, which is valued at 373.25 in April 2024, has surged almost 254 percent over the past year. Even when looking at a longer time frame of three years, the stock gave a multibagger return of almost 737 percent. So let’s dive deep into the article to understand why the company gave stellar performance over the years and what the future holds for the company.

Corporate Overview Of Himadri Specialty Chemicals

Founded in 1990, Himadri Speciality Chemicals embarked on its journey with the establishment of a coal tar distillation plant in Howrah, West Bengal, under the stewardship of the Choudhary family based in Kolkata. Currently helmed by Anurag Choudhary as the Managing Director & CEO, the company has undergone significant evolution over the years.

Initially focused on coal tar, Himadri has since expanded its operations into a comprehensive value chain within the carbon sector. Additionally, it has diversified into Carbon Black, Construction Chemicals, and Lithium-ion Batteries, reflecting its adaptability and strategic foresight.

With manufacturing facilities strategically spread across West Bengal, Chattisgarh, Andhra Pradesh, Gujarat, and Odisha, Himadri boasts a robust production network. Moreover, it has a presence in Shandong, China, further expanding its global footprint. These manufacturing plants cater to a diverse clientele, exporting products to over 49 countries worldwide.

Business Segments Of Himadri Specialty Chemicals

Carbon Black

Carbon black serves as a crucial component in enhancing the strength of rubber, particularly in tires and various automotive and non-automotive rubber parts. 

In addition to its reinforcement properties, carbon black offers distinctive colouring and conductive characteristics, making it valuable in diverse applications such as inks, coatings, films, plastics, conductive cables, electrostatic dissipative (ESD) packaging, synthetic fibres, and other performance-oriented uses.

Himadri Speciality Chemical Ltd is at the forefront of carbon black production, offering a comprehensive range of carbon black products encompassing both ASTM standard grades and specialty variants.

Speciality Black

Specialty carbon blacks offer a variety of functional benefits, allowing customers to reinforce materials, add colour, enhance mechanical properties, provide UV protection, and impart conductivity across a broad spectrum of products. 

Himadri’s specialized carbon black range is specifically designed to meet these diverse needs, catering to various end uses such as racing tires, automotive fuel systems, interior components, pressure pipes, power cables, agricultural films, paints, and inks, among others.

Anode Materials

Anode materials are essential for the operation of Lithium Ion Batteries, serving as key components in various applications such as smartphones, electric vehicles, and renewable energy storage systems. These materials significantly impact the overall performance and efficiency of such technologies.

Himadri is committed to producing top-notch Anode Materials with a focus on minimizing carbon footprint. Leveraging in-house precursor “Meso-coke” technology, Himadri is backwardly integrated to precursor coke for Anode Materials.

Himadri’s Anode Materials are designed to cater to major Lithium Ion Battery applications in electric vehicles (EVs) and energy storage systems (ESS). The company offers a range of four distinct types of Anode materials to meet the diverse needs of its customers.

Speciality Oils

Himadri engages in the development of diverse specialty products for various sectors using its in-house research and development facilities. These products are derived from the advanced coal tar distillation facilities, which yield different types of oils from multiple phases.

Employing a continuous distillation technique, Himadri ensures consistent separation of distillates by utilizing a series of fractional distillation columns. During the distillation process, oils of varying grades are segregated based on their boiling points.

Subsequently, these different cuts of oils are meticulously combined in precise proportions through operational procedures to fulfil the specific requirements of customers.

Financials Of Himadri Specialty Chemicals

In the fiscal year 2023, Himadri Speciality Chemicals saw a substantial increase in revenue, surging by 49% to reach ₹4171.84 crore as opposed to ₹2791.32 crore in FY2022. Analyzing a span of four years, encompassing FY2020 to FY2023, the company displayed a  Compound Annual Growth Rate (CAGR) of 32.2% in revenue.

The reason for the improved financial performance was due to robust growth in production volume and the accelerated expansion of the core business which have been backed by the timely introduction of value added products. 

Besides, the company is also continually working towards improving the financial position and have significantly reduced the net debt and strengthened the balance sheet. The debt-equity ratio stands at 0.09 times for the current fiscal 2023 as compared to 0.17 times for the previous year.

Simultaneously, there was a noteworthy upturn in net profit, experiencing a 452% increase from ₹39.05 crore in FY2022 to ₹215.86 crore in FY2023. Over the cumulative four-year period from FY2020 to FY2023, the net profit showcased 1.68% CAGR.

In FY23, Himadri Speciality Chemicals maintained favourable financial metrics with a Return on Equity (ROE) of 11.47% and Return on Capital Employed (ROCE) of 13.42%.

Future Plans Of Himadri Specialty Chemicals

Strong Market Position, with Integrated Business Model

HSCL holds the position of being the largest manufacturer of Coal Tar Pitch (CTP) in India, contributing approximately half of the industry’s capacity. In the domestic carbon black market, it ranks among the top five players. 

The company produces carbon black using a blend of coal tar oil it produces internally and imported carbon black feedstock (CBFS), allowing it to adjust its feedstock mix based on cost considerations.

In times of lower demand for CTP, HSCL can increase its production of oil, thus reducing its reliance on imported CBFS for the carbon black segment. Moreover, within the carbon black segment, HSCL possesses a production capacity of 60,000 metric tonnes for manufacturing value-added specialty products.

In a bid to vertically integrate its carbon black business, HSCL plans to acquire Birla Tyre Limited (BTL) in FY24. Additionally, as part of its strategy to diversify its business portfolio, HSCL aims to establish a facility for manufacturing lithium iron phosphate (LFP) cathode active material, a critical component for lithium-ion batteries, in the medium term.

Expansion Plans

Himadri Speciality Chemical is planning to undertake a brownfield expansion project in West Bengal to increase its speciality carbon black capacity. The estimated investment for this project is Rs 220 crores, according to a company official’s statement on Sunday.

This expansion aims to cater to the growing demand from Europe, especially in light of the impending ban on Russian carbon black imports in the EU. Located at Singur in the Hooghly district, the expansion project is expected to be operational within the next 18 months and will be funded through internal accruals.

Upon completion, this additional capacity of 70,000 tons per annum will raise the company’s speciality carbon black capacity to 1.3 lakh tons per annum, thereby increasing the cumulative capacity to 2.5 lakh tons from the current 1.8 lakh tons.

Conclusion

Himadri Specialty Chemicals has demonstrated remarkable growth and strategic foresight, pivoting towards the promising lithium-ion battery sector while strengthening its core carbon business. With its integrated business model, expansion plans, and commitment to innovation, the company appears well-positioned for future success. 

However, what are your thoughts on Himadri’s future prospects? Do you envision continued dominance in the carbon market and a successful foray into sustainable energy solutions?

Written by Nalin Suriya

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