PRIMO - Primo Chemicals

📊 NSE: PRIMO 🏢 Commodity Chemicals 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

Revenue from operations reached INR 707.4 Cr in FY23, representing a 56% YoY growth. In FY25, the company reported a further ~35% YoY growth in the scale of operations, driven by improved realizations and operational efficiencies.

Geographic Revenue Split

Not disclosed in available documents, though the manufacturing facility is strategically located in Naya Nangal, Punjab, serving regional industrial demand.

Profitability Margins

Gross Profit Margin stood at 51% in FY23. Net Profit Margin improved by 645 bps to 18.7% in FY23 (INR 137.4 Cr). FY25 saw a 775 bps improvement in profit margins due to better operational performance.

EBITDA Margin

EBITDA Margin was 29.8% in FY23, an improvement of 850 bps YoY. Absolute EBITDA reached INR 218.5 Cr in FY23, a 115% increase from the previous year.

Capital Expenditure

The company has no major debt-funded capex plans in the near-to-mid-term as of July 2025. Previous investments include a 35 MW captive power plant and upgrades to wastewater management systems.

Credit Rating & Borrowing

CARE Ratings reaffirmed 'CARE BBB-; Stable' in July 2025, an upgrade in outlook from 'Negative'. Total rated bank facilities include INR 102.71 Cr (Long-term) and INR 75.00 Cr (Short-term). Average working capital utilization was ~87% for the 12 months ending May 2025.

⚙️ Operational Drivers

Raw Materials

Primary raw materials include Salt, Coal (for power generation), and Aluminum metal. Salt and energy are the most critical cost components for the chlor-alkali process.

Import Sources

Not specifically disclosed, but the company manages procurement through negotiations with suppliers for salt and coal.

Capacity Expansion

Current operations include a 35 MW captive power plant at Naya Nangal. Planned expansions include Paracetamol API and Hydrogen Peroxide plants to strengthen the downstream portfolio and increase chlorine consumption.

Raw Material Costs

Raw material risks are managed through supplier negotiations. The company has successfully reduced raw water consumption by 5% to 6% through technology upgrades in wastewater management.

Manufacturing Efficiency

The company achieved the 'Punjab State Safety Award' for the largest reduction in accident frequency. Attrition rate is maintained at a low 1% to 2%.

📈 Strategic Growth

Expected Growth Rate

35%

Growth Strategy

Growth is targeted through downstream integration into Paracetamol API and Hydrogen Peroxide. This strategy aims to increase internal chlorine consumption, which currently limits caustic soda production capacity, thereby improving overall Electro-Chemical Unit (ECU) profitability.

Products & Services

Caustic Soda Lye, Hydrogen Gas, Liquid Chlorine, Hydrochloric Acid, and Sodium Hypochlorite.

Brand Portfolio

Primo Chemicals (formerly Punjab Alkalies & Chemicals Limited).

New Products/Services

Paracetamol API and Hydrogen Peroxide are in the pipeline, expected to enhance product profitability by utilizing byproduct chlorine.

Market Expansion

The company is expanding its downstream portfolio to reduce dependence on commodity caustic soda sales and improve value-added product contribution.

🌍 External Factors

Industry Trends

The caustic soda industry is currently cyclical. The trend is moving toward integrated players who can consume chlorine internally to produce value-added downstream chemicals, mitigating the risks of chlorine disposal.

Competitive Landscape

Competes with established integrated chemical players in the chlor-alkali sector.

Competitive Moat

The company's moat is built on its favorable plant location in Punjab and its 35 MW captive power plant, which provides a cost advantage over non-integrated competitors. The experienced promoters (Flow Tech Group) provide operational stability.

Macro Economic Sensitivity

Highly sensitive to industrial growth and energy prices. A 1% change in power costs significantly impacts margins due to the energy-intensive nature of electrolysis.

Consumer Behavior

Demand is driven by industrial users in textiles, paper, and alumina sectors.

⚖️ Regulatory & Governance

Industry Regulations

Subject to stringent Punjab Pollution Control Board (PPCB) norms. Compliance with BIS licenses for Caustic Soda (IS 252:2013) and SBP (IS 1065:2019) is mandatory for market access.

Environmental Compliance

The company maintains ISO 14001:2015 (EMS) and ISO 50001:2018 (EnMS) certifications. It uses an Online Monitoring System connected to the Central Pollution Control Board (CPCB) for real-time data reporting.

Legal Contingencies

Litigation claims are pending regarding environmental, social, or ethical grounds. No specific case values were disclosed in the provided documents.

⚠️ Risk Analysis

Key Uncertainties

Volatility in ECU realizations and potential regulatory bans on major products are the primary business risks. Environmental non-compliance could lead to heavy fines or plant closure.