Update-
I had written about PACL in one of the previous post when it was to be divested by Punjab Government and taken over by the now new promoter Flow Tech Group. Since the acquisition they seem to have achieved a lot in a span of 6 months which being a PSU it would never achieve. Having started with setting up an extension unit in the PACL unit to now acquiring it, the group has strengthened its footing in the Chlor Alkali space.
The best of acquisitions in the chemicals space would indeed be at the bottom of the cycle-
With an upward trajectory of Caustic Soda and ECU(Caustic Soda + Chlorine) prices, quarterly impact of 10-15% hike would be relevant for a small company like PACL-
The company though ensued a large dilution in its recent board meeting issuing around 1.3 cr shares at Rs.60 for cash and non-cash (Link) , but this could change the profitability dynamics of the company going forward. Bulk of the dilution is for non cash to install a 35MW captive power plant. Till now the company incurred 60% plus in power cost (inspite of being a PSU) whereas much larger companies like Gujarat Alkalies spend approx 22% with it having discounted power rates and a 90MW capitve plant. Even if PACL reduces this to 35-40% , annual savings are 30-40 crore. Post dilution effective market cap is 350 cr now.
Given how the management is aggressively taking key decisions, it would be a natural step to merge the downstream process of chlorine housed in Flowtech chemicals pvt ltd into the company. In a nutshell, it is a company to track for the next 2 years.