July 19, 2022 (MLN): Engro Polymer and Chemical Limited (EPCL), en-routes efficiency/expansion projects which include; Hydrogen peroxide production & High-Temperature direct Chlorination.
Both of these projects are anticipated to be commissioned in 2023, the latest report issued by Pakistan Credit Rating Company (PACRA) said.
As per the rating agency, Hydrogen peroxide will add diversity to EPCL’s product mix by penetrating into the Hydrogen peroxide market through a green field manufacturing facility by investing around USD 35-40mn.
In addition to this, the rating agency has upgraded the entity ratings of the company from AA- to AA+ for the long term while maintaining the short-term rating at A1+. The outlook of the company has been predicted stable from positive in the previous rating report.
These ratings reflect EPCL’s strong established foothold in the manufacturing of Poly Vinyl Chloride (PVC) resin, and Chlor Alkali products (Caustic Soda, Sodium Hypochlorite, and Hydrochloric Acid).
EPCL is the sole manufacturer of PVC resin in the domestic market. During 1HCY21, EPCL successfully completed its 100KTA PVC plant-3 project along with the 50KTA VCM plant debottlenecking project. The combined capacity of PVC plants now stands at 295KTA.
These expansion projects enabled EPCL to fully serve domestic demand, support import substitution, and increase export sales footprint by surplus capacity.
During CY21 the EPCL claimed to dominate the local market share in PVC resin as compared to CY20 mainly on account of import substitution which adds comfort to the assigned ratings.
As a result, the company’s topline grew by around 98% in CY21 owing to an increase in sales volume followed by higher PVC prices which translated into the highest ever profitability.
It is anticipated that PVC resin demand will remain strong due to ongoing infrastructure and modernization projects, rapid urbanization trends, and rehabilitation of existing sewage and water pipes distribution systems., the report said
In addition, the elevation of living standards, rapidly growing population, and real estate developments will continue to drive PVC demand.
To note, the stock of the company is currently Rs74.69 (12:45 PST), down by 1.33 or (1.75) from yesterday’s price.
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