India Glycols zooms 10% on capacity expansion of its Uttarakhand plant

India Glycols has increased the capacity of its grain based distillery and bio-fuel ethanol plant in Uttarakhand, while the expanded capacity at its Gorahpur, UP, plant is expected to be commissioned

India Glycols shares soared as much as 10 per cent and registered an intraday high of Rs 1,346 on the BSE on Tuesday, October 1. The northward movement in the stock came after the company informed that it has enhanced the capacity of its existing grain based distilleries and bio-fuel ethanol plants located at Gorakhpur, Uttar Pradesh, and Kashipur, Uttarakhand.

At around 12:48 PM, shares of India Glycols were up 7.9 per cent at Rs 1,324.85 per share on the BSE. In comparison, the BSE Sensex was trading 0.11 per cent lower at 84,209.3 around the same time.

As per the company's exchange filing, it has successfully added a capacity of 100 kilo litres per day (KLPD) to its existing grain-based distillery at Kashipur, Uttarakhand, taking the overall capacity of the distillery to 500 KLPD.

Further, it has added 180 KLPD capacity to its existing bio-fuel ethanol plant at Kashipur, thereby increasing the overall capacity to 590 KLPD.

Apart from that, India Glycols has also added a capacity of 2,500 MT per year to the facilities/ project for new value-added chemical products at Kashipur, Uttarakhand. The revised capacity of the facility now stands at 7,500 MT/year, according to its exchange filing.

Meanwhile, the company also said that work on enhancing the capacity of its grain-based distillery facility by 180 KLPD, and bio-fuel ethanol (ethanol to bio-fuel conversion) capacity by 90 KLPD at its Gorakhpur facility is under progress. The enhanced capacity at these facilities is expected to be commissioned by Q4FY25, the company added.

Nuvama, in a report dated July 20, 2024, had initiated coverage on India Glycols with a 'Buy' rating and a target of Rs 1,365 per share. The brokerage believes the company's performance has recovered after facing volatility in key raw material prices and pricing pressures in end-products in FY23.

Further, with the current capacity expansion, change in its revenue mix, and consequent improvement in earnings, warrant a re-rating of the stock.

"Our SoTP-based target price of Rs 1,365 implies an FY26E blended EV/EBITDA of 8x," the brokerage stated.

India Glycols is a green chemicals company. It provides chemicals such as glycols, glycol ethers, acetates, bio-polymers, natural gums, and potable alcohol, that have end applications across businesses and industries.

In the past one year, shares of India Glycols have gained 72.6 per cent, compared to the BSE Sensex's rise of 29 per cent during the same period.