Unleashing carbon potential in the lithium-ion battery market

Carbon, also called the “VIP” of the periodic table, plays a most important role in many aspects of human life. It is found in everything from plants and pencils to diamonds and even the human body, and plays an important role in our ecosystem.

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

Additionally, the company is strategically turning to the lithium-ion battery segment for future expansion. In response to surging demand for electric vehicles (EVs), Himadri Specialty Chemicals has unveiled India’s first commercial plant for lithium iron phosphate (LFP) cathode material, a key component of electric vehicle batteries.

Given the pivotal role of lithium-ion batteries in powering EVs and storing energy, they are expected to play a critical role 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. , demonstrating commitment to innovation and environmental management.

The company’s stock price, valued at 373.25 as of April 2024, has surged nearly 254% over the past year. Even over a longer period of three years, this stock has delivered a multibagger return of nearly 737%. So, let’s take a closer look at the article to understand why the company has performed so well over the years and what the future holds for the company.

Himadri Specialty Chemicals Corporate Overview

Founded in 1990, Himadri Specialty Chemicals The journey began with the establishment of a coal tar distillation plant in Howrah, West Bengal, under the management of the Kolkata-based Choudhary family. Currently headed by Anurag Choudhary as Managing Director and CEO, the company has made significant progress over the years.

Initially focused on coal tar, Himadri has since expanded into the comprehensive value chain within the carbon sector. In addition, reflecting adaptability and strategic insight, we are diversifying our business into carbon black, construction chemicals, and lithium-ion batteries.

With strategically distributed manufacturing facilities across West Bengal, Chattisgarh, Andhra Pradesh, Gujarat and Odisha, Himadri boasts of a strong production network. We are also expanding our global presence by entering Shandong, China. These manufacturing plants cater to a wide range of customers and export their products to over 49 countries around the world.

Himadri Specialty Chemicals Business Units

carbon black

Carbon black is used as an important ingredient to increase the strength of rubber, especially in tires and various automotive and non-automotive rubber parts.

In addition to its reinforcing properties, carbon black offers unique color and conductive properties, making it valuable in a variety of applications such as inks, coatings, films, plastics, conductive cables, electrostatic dissipative (ESD) packaging, synthetic fibers, and other performance-oriented products. Use.

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

specialty black

Specialty carbon blacks offer a variety of functional benefits, allowing customers to strengthen materials, add color, improve mechanical properties, provide UV protection and impart conductivity to a wide range of products.

Himadri’s specialty carbon black range is specifically designed to meet these diverse requirements for a variety of end applications including racing tires, automotive fuel systems, internal components, pressure pipes, power cables, agricultural films, paints and inks.

cathode material

Anode materials are essential for operation. lithium ion batteryIt is used as a key component in various applications such as smartphones, electric vehicles, and renewable energy storage systems. These materials have a significant impact on the overall performance and efficiency of the technology.

Himadri is committed to producing the highest quality cathode materials with a focus on minimizing carbon emissions. Utilizing its own precursor “Meso-coke” technology, Himadri is sub-integrated into precursor coke for anode materials.

Himadri’s anode materials are designed for key lithium-ion battery applications in electric vehicles (EV) and energy storage systems (ESS). The company offers four types of cathode materials to meet the diverse needs of customers.

special oil

Himadri is engaged in the development of various specialty products in various fields utilizing its own research and development facilities. The product is derived from an advanced coal tar distillation facility that produces different types of oils in several stages.

Using continuous distillation technology, Himadri utilizes a series of fractionation columns to ensure consistent separation of the distillate. During the distillation process, different grades of oil are separated based on their boiling points.

Afterwards, these various oil cuts are meticulously combined in precise proportions through working procedures to meet the specific requirements of our customers.

Finance of Himadri Specialty Chemicals

In FY 2023, Himadri Specialty Chemicals witnessed significant growth in its revenue, surging 49% to reach ₹4,171.84 crore as compared to ₹2,791.32 crore in FY 2022. After analyzing four years from FY2020 to FY2023, the company recorded a compound annual growth rate (CAGR) of 32.2%.

The reason for the improvement in financial performance is the accelerated expansion of core businesses due to the solid increase in production and the timely launch of high value-added products.

Additionally, the Company continues to work to improve its financial position, significantly reducing net debt and strengthening its balance sheet. The debt ratio in fiscal 2023 is 0.09 times, which is higher than the previous year (0.17 times).

At the same time, there has been a notable increase in net profit, with a 452% increase from ₹39.05 crore in fiscal 2022 to ₹215.86 crore in fiscal 2023. Cumulative net profit over the four years from fiscal 2020 to fiscal 2023 recorded a CAGR of 1.68%.

In FY23, Himadri Specialty Chemicals maintained favorable financial metrics with return on equity (ROE) of 11.47% and return on equity (ROCE) of 13.42%.

Himadri Specialty Chemicals’ future plans

Strong market position through integrated business model

HSCL is India’s largest coal tar pitch (CTP) manufacturer, accounting for approximately half of the industry’s production capacity. It ranks in the top 5 in the domestic carbon black market.

The company produces carbon black by blending internally produced coal tar oil with imported carbon black feedstock (CBFS), allowing it to adjust its feedstock mix for cost considerations.

In times of declining CTP demand, HSCL can increase oil production to reduce dependence on imported CBFS for the carbon black segment. Moreover, within the carbon black segment, HSCL has a production capacity of 60,000 tonnes to manufacture value-added specialty products.

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

expansion plans

Himadri Specialty Chemical plans to undertake a brownfield expansion project in West Bengal to increase production of specialty carbon black. The estimated investment for the project is Rs 220 crores, according to a statement by company officials on Sunday.

The expansion is aimed at meeting growing European demand, especially given the imminent ban on imports of Russian carbon black in the European Union. The expansion project, located at Singur in Hooghly district, is expected to be operational within the next 18 months and will be funded through internal accruals.

Once the additional production capacity of 70,000 tons per year is completed, the company’s special carbon black production capacity will increase to 1.3 million tons per year, increasing the cumulative production capacity from the current 1.8 million tons to 2.5 million tons.

conclusion

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

But what do you think about Himadri’s future prospects? Do you foresee continued dominance in the carbon market and a successful foray into sustainable energy solutions?

Written by Narin Surya

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