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BSE Code : 500201

NSE Symbol : INDIAGLYCOL

CMP : Rs.141.25

Belonging to Bhartia family, India Glycol Ltd has emerged as leading manufacturer of GLYCOLS, E O Derivatives, Ethyl Alcohol, ENA etc. Its integrated facilities manufacture chemicals including glycols, ethoxylates, glycolethers and acetates and various performance chemicals. Its product range spans chemicals, spirits, herbal and other photochemical extracts and guar gum, industrial gases which find application across vast number of industries. IGL had started with a path-breaking green approach to manufacture MEG from molasses instead of petrochemicals. In fact, IGL is the only company in the world to produce MEG from molasses. IGL has organised its business into chemicals and other segments:

A. Chemical segments comprises:

• Glycols (MEG, DEG, TEG and Heavy Glycols)

• Ethylene Oxide Derivatives (EODs).

B. Ethyl Alcohol and Extra Natural Alcohol C. Others includes High Sulphur Alcohol, Hydro Choloric Acid, Natural Gum, Industrial gases, Nutraceuticals and Herbal Extraction etc

MEG is mainly used as an intermediate by Polyester/Textile industry.
There has been substantial increase in polyester manufacturing capacities in India due to major expansion undertaken at Reliance, IndoRama, JBF and Garden Mills Overall demand of MEG in India is 14 lac tonnes as compared to supply of 7.50 lac tonnes and balance demand is met by imports.

EODs produced by company are used by diverse industries like Textile, Agrochemicals, Detergents, Pharma, Personal care, Oil Field and Automotive industry, Paint industry etc. Company has been increasing its business by developing new products especially in areas of Textile chemicals, Oil Field chemicals, Paper chemicals, Home care and Personal care segment.

IGL set up a 100% EOU by name of Ennature Bio-pharma division by
taking 47 acres land on lease from Uttarakhand government where it is growing a wide variety of medicinal plants etc. It has also set up a Supercritical Fluid Extraction facility at Dehradun for producin various Phytopharmaceuticals and Nutraceuticals products. This unit is being used for extraction of Dietary Food supplements, Natural Colors, Health care fruits & vegetables, Herbal extracts, Fruit flavours & fragrances

IGL has also set up RAB (concentrated sugarcane juice) unit. Entire production is consumed captively to supplement ethanol requirement. In order to have uninterrupted supply of molasses for its Glycol unit, IGL acquired controlling stake in SSAIL which operates sugar manufacturing plant in UP with a crushing capacity of 5500 tonnes per day along with a modern distillery of 40KL per day producing high quality rectified spirit, ethanol and country liquor and an internal bagasse fired cogeneration plant of 11.40MW.

Performance of IGL in last 2 years had been average as molasses prices were ruling high. On the other hand, new capacities of MEG had been commissioned in Saudi Arabia which had led to temporary dip in MEG selling prices. However due to rising production of polyester in India and higher prices of Ethylene (which is raw material for petrochemical based MEG producers),

MEG prices started rising in 2011 and have now stabilized at remunerative levels. Simultaneously, Molasses prices have softened and there is strong demand in domestic as well as export market for its entire range of chemicals including E O Derivatives. Now,IGL has reported best ever results in its entire history. For 9 month ended Dec 2011, its turnover has by 50% to 2010 crores which is higher than turnover achieved in entire FY11. Pat has zoomed to 77 crores, a rise of nearly 800%. Cash profit for 9 months is high at 216 crores. Stock is trading at :-

• 3.90xFY12E Eps

• 3.40xFY13E Eps

• 0.80xFY12E Book Value Above valuations are quite attractive as IGL has emerged as amongst the biggest and fastest growing chemical companies in India. FINALLY, MARKET CAP OF IGL IS AROUND 390 CRORES WHEREAS COMPANY HAS EARNED CASH PROFIT OF 320 CRORES IN LAST 7 QUARTERS (21 MONTHS ONLY). Clearly, scrip is fundamentally underpriced.