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Check Before You Invest : Pondy Oxides & Chemicals Ltd

BSE: 532626 NSE: POCL ISIN: INE063E01053
  |   Sector:  Metals & Mining   |   Industry:  Metal - Non Ferrous

Snapshot

Q.1 Which industry/sub-sector does Pondy Oxides & Chemicals Ltd belong to?
Pondy Oxides & Chemicals Ltd belongs to the Metals & Mining sector, operating specifically within the Metal - Non Ferrous segment.
Q.2 Is Pondy Oxides & Chemicals Ltd a good quality company?
Pondy Oxides & Chemicals Ltd is a average quality company, based on a somewhat consistent multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Pondy Oxides & Chemicals Ltd undervalued or overvalued?
Pondy Oxides & Chemicals Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 37.74 14.43
Price to Book 6.11 2.30
Price to Sales 1.78 0.38
EV to EBITDA 23.9 10.70
Q.4 Is Pondy Oxides & Chemicals Ltd a good buy now?
Pondy Oxides & Chemicals Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd revenue growth is 33% for FY-2025, which is above its 5-year CAGR of 10.7%, indicating faster growth.

Q.2 Gross Profit margin of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Gross profit margin which is the profit after deduction of direct costs, is 4.7% for FY-2025, which is in line with its 5-year median of 4.7%, indicating stable margins.

Q.3 Operating Profit Margin of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 5.2% for FY-2025, which is in line with its 5-year median of 5.2% indicating stable margins.

Q.4 Net Profit Margin of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Net Profit Margin is 3.21% for FY-2025, is in line with its 5-year median of 3.21%, indicating stable margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 4.7 4.7
Operating Profit Margin (%) 5.2 5.2
Net Profit Margin (%) 3.21 3.21

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Return on Asset is 10.91%, which is in line with its 5-year historical median of 10.91%, indicating stable asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Return on capital employed is 16.88% for FY-2025, which is in line with its 5-year historical median of 16.88%. The current ROCE is above its estimated weighted average cost of capital (WACC) of 14%, indicating value creation.

Q.7 Return on Equity (ROE) of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Return on equity is 14.2% for FY-2025, which is in line with its 5-year historical median of 14.2%, indicating the business is making similar use of its shareholders capital.

Q.8 Cash conversion cycle of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Cash conversion cycle is 50 days, below its 5-year historical median of 56 days, indicating improved working capital management. However, you need to compare this with its peers in the industry.
Current Level 5-year
Historic Median
Asset Turnover (x) 3.4 3.74
ROE (%) 14.2 14.2
ROCE (%) 16.88 16.88
Cash Conversion Cycle 50 days 56 days

C: How much debt does the business have and is it at a sustainable level?

Q.9 Debt to Equity ratio of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Debt-to-Equity ratio is 0.18, which is lower the industry average of 0.39, indicating lower debt levels in the industry.

Q.10 Debt to cash flow from operations of Pondy Oxides & Chemicals Ltd?
Pondy Oxides & Chemicals Ltd Debt to cash flow from operations is -1.3, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Pondy Oxides & Chemicals Ltd?

Q.1 Promoter shareholding and pledge status of Pondy Oxides & Chemicals Ltd?
Promoters hold 39.34% of the Pondy Oxides & Chemicals Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Pondy Oxides & Chemicals Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Pondy Oxides & Chemicals Ltd vs industry peers?
Pondy Oxides & Chemicals Ltd revenue CAGR is 10.70%, compared to the industry median CAGR of 0%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) 33 -
Gross Profit Growth (%) 57.4 24.7
Operating Profit Growth (%) 40 15.9
Net Profit Growth (%) 62.5 22.6
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 3.4 2.38
ROE (%) 14.2 4.28
ROCE (%) 16.88 8.46
Cash Conversion Cycle (days) 49.73 51

Valuation & price assessment

Q.1 Stock return of Pondy Oxides & Chemicals Ltd over the last decade?
Over the last 9 year(s), the stock has delivered a CAGR of 49.9% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR
49.9% 90.6% 104.5% 85.1%
Q.2 Valuation ratios of Pondy Oxides & Chemicals Ltd vs historical?
The current P/E ratio of 37.74 is higher than its historical median of 14.43, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median
5-year
Industry Median
Price to Earnings 37.74 14.43 27.16
Price to Book 6.11 2.30 2.29
Price to Sales 1.78 0.38 0.62
EV to EBITDA 23.9 10.70 12.16

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