Unlisted Shares

Market Leader: 

• India's largest white oils manufacturer with a dominant market share of 25.6% in the domestic market and a significant global presence with a 7.6% market share as of 2023.

• A leading player in personal care, healthcare, performance oils (PHPO), lubricants, and process and insulating oils (PIO).

• Maintains a diverse product portfolio with over 440 offerings, catering to various sectors, with a strong focus on consumer and healthcare end-user industries.

Revenue Growth:

• Revenue Growth: CAGR of 48.61% over the last 3 years from ₹1728.7 Cr FY21 to ₹3818.1 Cr, in FY23
• PHPO's contribution to revenue is an aggregate of 69.34% (FY23) and 71.25% (Q3 FY24) to consolidated revenue with division growth CAGR: 64.90% from FY21 to FY23.

Profitability: 

• The company differentiates itself from competitors by strategically focusing on products for the consumer and healthcare end industries, which contribute 30.22% and 7.89% to its revenue, respectively. Net profits have grown at a 3-year CAGR of 163% even though NPM remained at 5% in FY23.

• Over the past three years, the company has consistently maintained strong financial performance, achieving an average manufacturing gross margin spread of over 16%, an average operating profit margin (OPM) of 9%, an average return on capital employed (ROCE) exceeding 49%, an average return on equity (ROE) exceeding 41%, and an average low net debt-to-equity ratio of 0.45.

• With a strong emphasis on its PHPO business division and the consumer and healthcare end industries, the company is well-positioned for continued growth and margin expansion.

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R&D Dominance:

• 3 manufacturing facilities are located in Taloja, Maharashtra; Silvassa, Daman and Diu; and Sharjah, United Arab Emirates with a combined annual production capacity of 522,403 kL as of June 30, 2023.
• The facilities are ISO-certified and endorsed by FSSAI and the Maharashtra FDA for WHO GMP and produce halal and kosher-certified petroleum jelly, paraffin wax, mineral oil, and NSF-registered food-grade white oil.
• The R&D facility at the Silvassa Plant is registered with DSIR, Ministry of Science and Technology, Government of India. The facilities are equipped with advanced technological features, including jet-mixing, fast-unloading, product testing, and SCADA capabilities.
• Production capacity at the Taloja Plant is being enhanced by 100,000 kL, with an incremental capacity of 25,000 kL commissioned in October 2022.

Opportunity:

• The global specialty oil market is expected to reach $154.0 billion by 2028, with a CAGR of 3.5%, from its current value of $129.90 billion in 2023. The APAC region is the leader in the global specialty oil market, with a share of 38.4% by value and 42.7% by volume.

• The Indian specialty oil market is estimated to be $7.33 billion in 2023 and is projected to reach $9.30 billion by 2028, at a CAGR of 4.9%. The absolute incremental opportunity for the specialty oil market in APAC over the next five years is estimated to be ~$24 billion.

Legacy: ​

• The Divyol brand holds a prominent position within the company's product portfolio. A diversified customer base of 3,558 customers in FY23 includes renowned names like P&G, Unilever, Marico, Emami, Bajaj Consumer Care, Encube, Patanjali Ayurved, Dabur, Amrutanjan Healthcare, Supreme Petrochem, and leading Indian pharmaceutical manufacturers in the PHPO division.

• Customers in the lubricants division include Gulf Oil, Adani Ports and Special Economic Zone, and various industrial machinery and equipment users. The PIO division serves Toshiba Transmission and Distribution Systems (India) along with other major transformer manufacturers and power distribution and transmission companies.

• Strong customer relationships have resulted in high customer loyalty, with an average percentage of repeat orders of 68% over the past three years, reaching 83.74% in Q2 FY24.

• As of June 30, 2023, overseas operations have expanded to over 100 countries, with revenue from overseas sales exhibiting significant growth at a CAGR of 71.22% over the past three financial years.

Investment Thesis:
• Market Dominance: The company holds a dominant position in the Indian white oils market with a significant presence in overseas sales, particularly in the consumer and healthcare end industries.
• High Entry Barriers: Entry barriers exist in the market due to the preference for established speciality oil suppliers among key consumers and pharmaceutical manufacturers. Spot purchases from distributors are discouraged due to cost inefficiencies and potential margin erosion.
• Strategic Advantages: The company enjoys strategic advantages stemming from its manufacturing facilities, in-house R&D capabilities, and diverse customer base. Strong relationships with prominent oil companies, featuring competitive pricing terms, further reinforce its robust supplier base.
• Superior Financial Performance: The company's financial performance is superior to industry average ROE of 18% and a median P/E ratio of 30. Average 3 year ROE of the company was 41% and according to IPO price band the company was valued at P/E of 7.
• Compelling Investment Opportunity: The decision to initiate an IPO aims to secure funding for expanding current production capacities and introducing new products. With a substantial market opportunity and a strong business foundation, the prospect of an IPO positions the company as a compelling investment opportunity for the next decade as the company matches its industry average.