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Out of the box idea | Turnaround story | Red flags on previous earnings.

Inefficient capital allocation, past losses, acquisition setbacks and difficulties in running acquired companies, increasing debt levels, high trade receivables, significantly negative cash flows compared to net profits, increasing inventory, high cash conversion cycle, and other red flags are clearly visible while performing fundamental analysis of the company. Despite this, we are presenting this company as we believe it can be on the cusp of a turnaround.

Various remarks made by management, as well as the company’s ambitious plans for the coming period, suggest that the company might be on the cusp of a turnaround by FY25. However, the true effect will not be known until the conclusion of FY23. Because it is when we will be able to analyse what the management conveyed and what they have actually accomplished. As a result, users are advised to exercise great caution while investing in this company.

Normally in past other then 2-3 companies we have not suggested this type of very risky ideas. Therefore once again please do your own research before investing in this company. Darkhorsestocks or its members would not be responsible for any loss.

Bodal Chemicals Limited is one of India’s leading integrated Dyestuff companies and is the largest domestic manufacturer of Dye Intermediates. It offers a wide range of Dyestuffs, Dye Intermediates, Basic Chemicals, and its variants to diverse customers across India and the world. 


Current market price on the date of publishing this report-: 90 Rs


Incorporated in 1986 as a private limited company, Bodal chemicals is engaged in manufacturing of dyes and dye intermediates at Vatwa, Gujarat. In 1993, the company diversified into the manufacture of vinyl sulphone for captive consumption, export and domestic sales and also expanded to manufacture reactive dyes. Company also started commercial production of vinyl sulphone 1993 and that of reactive dyes in 94. Today Bodal chemicals is among world’s largest manufacturer and exporter of Dyes Intermediate, Dyestuff and Sulphuric Acid, with vertically and horizontally integrated company. 

Bodal Chemicals Limited has presence not only in India but across the Globe across 50+ countries with its Innovative products and services.

The company has more than 200 products in the existing segments of Basic Chemicals, Dye Intermediates, and Dyestuffs. It is looking to expand and diversify into Benzene Derivatives, Sulphuric Acid, and Chlor Alkali through capacity expansions and acquisitions. The end users of these products include Textile, Leather, Paper, Detergent, and Water Treatment industries. BCL has its manufacturing units across India, where we manufacture different products. 

At present company has total 11 (Eleven) Manufacturing units in operation, Ahmedabad-04, Vadodara-03,Ankleshwar-02 ,Bay of Kambhat-01, & Punjab-01.

In domestic market company’s marketshare in Dyestuff and Dye Intermediate is around 13% and 20%, respectively. Globally, Dyestuff and Dye Intermediate market share is around 3% and 6%, respectively. In the last 1 year, company has successfully implanted the Chlor Alkali products in its product portfolio and is further expanding the product basket and entering benzene chemistry products. Company is confident that it will be able to replicate a similar success in this new product as well.

Business and Products

Dye Intermediate Division

The company began operations with a single product, Vinyl Sulphone Ester (Acetanilide Base); with progressive improvement in manufacturing capacity, BODAL today produces more than 25 types of Dye Intermediates, with VINYL SUPHONE (Acetanilide Base) as the key product. The combined production capacity is approximately 30,000 TPA.

Bodal’s dye intermediates R&D has successfully introduced multiple products for diverse industries such as textile, leather, and paper during the last two decades. Almost 70% of the company’s output is exported globally to a variety of clients, including major multinational corporations. Products of the company are shipped to China, Korea, Thailand, Taiwan, Japan, and the European belt.

Vinyl has a strong foot. Sulphone Ester provided the power and depth to move forward with integration, giving birth to the DYES SECTION. To become more self-sufficient and competitive, BODAL choose backward integration, which resulted in the formation of the BASIC CHEMICALS and SULPHUR CHEMICALS DIVISIONS.

Dyestuff Division

The dyestuff division of the company has around more then 175 products which it manufactures. Company is ISO 9001-2015, ISO 14001-2004 certified with the Government of India Recognized 3 Star Export House.

Bodal Lab is well equipped with all type of instruments of Dyeing & fastness machine to carry out international fastness tests. Company standardized 20,000 MT/Annum for all classes of Reactive, Direct & Acid Dyestuff. It can supply Dyestuff in different forms like, Liquid/Powder/Salt-free. Moreover company is also known for its production consistency due to its backward integration.

Company manufactures broad range of dyes which can be used in various industries such as 

  • Paper industry
  • Leather industry
  • Textile industry

The Bodal “Textile Recipe Finder” is a one-of-a-kind online shade library with over 6,000 colours coloured using Bodactive Dyes. This programme delivers a quick, closest formula for any colour by simply inputting the RGB value of the shade. This application is a database of common colours on cellulosic substrates such as knits, woven textiles, twills, yarns, carpets, fibre, and so on. It also includes the formula for all Bantone colours that use Bodactive Dyes. By simply picking the Bantone shade number from the drop down box, you may obtain the formula for every Bantone shade.

Sulphur & Bulk Chemical Division

Bodal has in house facility of production of Beta Napthol, Acetanilide, Para Nitro Aniline. Also the manufacturing of Sulphuric Acid, Chloro Sulphonic Acid & Oleum started in early 2010. Under the chemical division company has production capacity of chemicals as follows

  • Acetanilide is one of the key raw materials for Vinyl Sulphone production facilities.
  • Beta napthol is a key raw material for multiple dye intermediates like 6 ntro and gamma acid. It is also a raw material for some dyestuff.
  • PNA is a key raw material for dye intermediates like FC acid and DASA. These intermediates are raw materials for acid dyes.
  • Sulfuric Acid is the most common used chemical in company. It is used in almost all the products produced at Bodal.
  • C.S.A. is the key raw material for VS and is the key raw material for reactive dyes.
  • Oleums 23% & 65% are also raw materials to many products in the list.

Water Purification Division

Trichloroisocyanuric Acid (TCCA 90) is a water purification CHEMICAL produced by Bodal Chemicals Ltd. As per the company it is the first and only company in India to manufacture this product.

This substance is mostly employed as a disinfectant, algicide, and bactericide in swimming pools and dyestuffs, but it is also utilised as a bleaching agent in the textile sector. It is commonly used in civil sanitation for pools and spas, disease prevention and treatment in animal husbandry and fisheries, fruit and vegetable preservation, wastewater treatment, as an algicide for recycled water in industry and air conditioning, anti-shrink treatment for woollens, seed treatment, and organic chemical synthesis.

Bodal chemicals has production capacity of – 

  • 12000 MT per year of TCCA – 90%
  • 2400 MT Per year of SDIC – 60% ( Upcoming )

Chlor Alkali Division

Bodal chemicals limited.-Punjab is a significant manufacturer of chlor alkali in North India. Caustic Soda (Flakes & Lye), Hydrochloric Acid, Stable Bleaching Power, Sodium Hypochlorite, Hydrogen, and Liquid Chlorine are the items. The environmentally friendly Membrane Cell Technology is used in the production process.

Caustic Soda (Flakes & Lye), Liquid Chlorine, Hydrochloric Acid, Sodium Hypochlorite, Hydrogen, and an export-oriented product – Stable Bleaching Power, STB – Military Decontaminant.

Company already has 4 consumers next to its plant where it sell them chlorine by pipeline.And there is also one more consumer who is about to start setting up the plant which is expected to be ready in about 8 to 10 months.

Also, company is in talks with a couple of other pipeline customers who are planning some expansion. One is SBP, stable bleaching powder, another is hydrochloric acid. So in hydrochloric acid, company has 200 tons per day capacity where it can use about 60, 70 tons of chlorine and for now the company is utilizing about 45% to 50%. Thus it can increase HCL production as well in the coming period.



Q1 FY22-23

  • Net Sales at Rs 458.95 crore in June 2022 up 8.8% from Rs. 421.81 crore in June 2021.
  • Quarterly Net Profit at Rs. 23.87 crore in June 2022 down 20.05% from Rs. 29.86 crore in June 2021.
  • EBITDA stands at Rs. 53.61 crore in June 2022 down 3% from Rs. 55.27 crore in June 2021.
  • Bodal Chemicals EPS has decreased to Rs. 1.95 in June 2022 from Rs. 2.44 in June 2021.

For year ended March 22

  • Total revenue stood at Rs.2,068 crores, a growth of 66% on year-on-year basis. 
  • Around 32% of the business was contributed by export and balance of 68% from domestic sales. 
  • EBITDA stood at Rs.237 crores in FY’22 against Rs.120 crores for FY’21, a growth of 97.7%. 
  • The Turkish Lira has been volatile throughout the year and has affected the annual performance. 
  • Other expenses on full year basis has also increased primarily due to additional overhead costs from Rajpura unit, coupled with higher power and logistic cost. 
  • Net profit for the FY’22 stood at Rs.99 crores against Rs.40 crores of FY’21. 
  • FY’22 performance of the key subsidiaries were healthy.
    • S P S posted revenue of Rs.159 crores, a growth of 62% on year-on-year basis. 
    • Sener Boya has reported a total income of Rs.85 crores, a growth of 16% on year-on-year basis.
  • Total income from China’s subsidiary was Rs.36 crores, a growth of 124% on year-on-year basis.
  • Despite huge spark in profit of more then 100% the operating cash flow for the year ended march 2022 stood negatively at -18 crores
    • Receivables increased about 120 crores
    • Inventory increased by 137 crores and 
    • Payables increased about 35 crores thereby all together indicating red flags.

Forecasts are done based on the future visibility of earnings shoots. In terms of explanations to be provided based on the past earnings as well as the present financials of the company you may not find it attractive at all. And even we (Darkhorsestocks) can go wrong with this idea. But what differentiates darkhorsestocks from the others out there is we try to present company based on the what it can be while you will find a lot of professors, YouTubers, content creators conducting workshops and explaining why the company failed rather then trying to give their conviction. Because it is extremely difficult and only few can have it.


The upgradation of the Rajpura caustic unit is on track and is expected to be completed by October ’22. Post completion, our Chlor Alkali business will contribute a significant pie of total revenue.  Currently Chlor Alkali, is about INR 85 crore, once this gets commissioned in Q2, the expected revenue based on the current caustic soda prices could be around 400 crore and on normalised price of finished goods it is expected to be in range of 300-350 crores.

Additionally management has clarified that last year, this division has contributed INR 254 crore. So if it achieves INR 400 crore from this unit, then INR 150 crore is additional revenue will be coming from this division. 

Management’s comments and future Plans

Benzene derivatives and sulfuric acid, the Saykha greenfield project is progressing well and is expected to start a trial run in Q1 FY’24. Indian manufacturers import a lot of benzene derivatives. Company’s main goal is to replace imports and capture business in the pharma and agrochemical markets where such benzene derivatives are used.

With the new projects getting commissioned management is expecting more sustainable set of numbers. The company would be vertically integrated and the end products that company would manufacture would not be subject to market variations as has been the case today.

Company is transforming quickly.As said by the management if we were to look at the numbers 5 years back, dyestuff business or Intermediates were going into Dyestuff. So basically Dyestuff sector numbers were at 80%, 90% and only about 10% was coming from Basic Chemicals. Also back then company didn’t have specialty chemical like thionyl chloride or Chlor Alkali business. 

Now with the thionyl chloride comes in the picture, it again generates new revenues for the company and at the same time, a more steady business as the application is again not into textile. And then there is benzene derivatives, which is also expected to do well in the coming period and it caters to agrochemicals, pharmaceuticals, some of the new sectors . Thus thereby the dependency on the single factor product is decreased, further decreasing the volatility in the earnings and making it more sustainable in the coming period.

The worst seems to be behind

Company had 3 different subsidiaries of which, Trion which is a water treatment chemical business, has now already been amalgamated and that business is also performing decently now. The plant is running every single month and company has been able to export to U.S., which is its main market. Thus things seem to be settling down for the Triod.

Company had acquired SPS and there were some issues with the company such as there was always revenues but no profit. Company added vinyl sulphone plant there. So now management is hopeful that this integration will definitely do better than it did in last 5 years. 

Also, the Sener Boya, Turkey, which was acquired in 2019, pandemic created a very key role there. There was a lot of disturbances there but now going ahead, management doesn’t see a big threat of COVID or pandemic and is expecting a better performance than it did in last 3 years. 

On an overall basis management is seeing improvements coming in from all the subsidiaries as well as addition of this benzene is definitely going to add fuel to the future outlook of the company. Thus we can say that overall, company is definitely placed better next year than, it was for FY’22 or FY’23.

Investors are requested to not jump on to the stock immediately and do their own research before investing into this stock. The reason we suggested this stock today is for we believe there could be some turnaround story happening in this company but chances are we can be wrong and due to some unforeseen circumstances even management may not be able to deliver exactly what they conveyed despite rigorous efforts. Therefore once again we advice risk averse investors to wait for clear green shoots before jumping on to investing in this company. Darkhorsestocks or any of its members would not be responsible for any loss. It is our job to present the data, facts and information about the company and this in no way should be considered as an investment advice.


Bodal chemicals one of India’s leading integrated Dyestuff companies and is the largest domestic manufacturer of Dye Intermediates based on the past and current numbers presented raises a lot of red flags. But despite that management is set to take it to the next level in the coming period with various ongoing as well planned expansions. Management has also expressed their views of increasing the product portfolio and increasing capacity of some of the chemicals which would reduce the volatility of earnings and take the company towards more sustainable earnings growth with better margins as well. However increasing debt levels, coupled with negative operating cash flow, increasing days receivable do pose some threat. But taking into the consideration the expression made by the management worst could be behind us we are bullish on the future aspects of the company yet we can not say confidently that the company is on the track of growth. In order to confirm our assumption we would have to wait for another 2-3 qtrs to get more clarity. 

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