Frequently asked questions
Is Kothari Petrochemicals a buy at current prices?
DalalBytes rates Kothari Petrochemicals Selective Positive at 64/100. It is India's largest PIB maker with FY26 revenue of Rs 591 crore and PAT of Rs 72 crore, borrowings of about Rs 2 crore, and promoter holding of 72.22% with no pledging reported, trading at about 9.8x trailing earnings. The selective part is the pending amalgamation of Kothari Sugars and Chemicals, which made operating losses in FY26, at one share for every five sugar shares, plus three flat revenue years and a feedstock-related rating watch.
What are Kothari Petrochemicals' FY2029 price targets?
DalalBytes' FY2029 targets for Kothari Petrochemicals are bear Rs 85, base Rs 170, and bull Rs 275, from a Rs 120 reference price, on the current share count and the standalone PIB business. Bear: 2% revenue CAGR, 10% PAT margin, 8x exit. Base: 7% CAGR, 12.5% margin, 11x exit, EPS about Rs 15.40. Bull: 12% CAGR, 14% margin, 14x exit. FY2029 is the year ending March 2029.
What is the Kothari Sugars amalgamation and when is the vote?
The board approved on May 19, 2026 the amalgamation of Kothari Sugars and Chemicals into Kothari Petrochemicals at one Kothari Petrochemicals share for every five Kothari Sugars shares, with no cash consideration, a KPMG valuation and a Saffron Capital fairness opinion. The sugar company reported net worth of about Rs 296 crore and turnover of about Rs 247 crore at March 2026 and made operating losses in FY26. Shareholders and unsecured creditors vote on November 13, 2026.
What is the verdict on Kothari Petrochemicals?
PAT compounded from Rs 33 crore in FY22 to Rs 72 crore in FY26 and EPS from Rs 5.59 to Rs 12.32, operating margin sits at about 16%, ROE is about 21% and ROCE about 29%, and operating cash flow of Rs 81 crore exceeded PAT in FY26. Against that: revenue of Rs 596 crore, Rs 577 crore and Rs 591 crore across FY24 to FY26 is a plateau, not growth; ICRA put the A+ rating on watch with negative implications in March 2026 over feedstock supply volatility; and the pending sugar amalgamation would add roughly 28% more shares for a business currently making operating losses.
How did Kothari Petrochemicals start?
It began in 1989 with a caustic soda unit set up as backward integration for Kothari Sugars' nitro chloro benzene business; the chloralkali unit was later sold to Chemplast Sanmar, leaving a shell with marginal trading. The real business arrived on April 1, 2006, when Primetra Technologies, a group company that manufactured polyisobutylene, was merged in. PIB has been the single business ever since, deepened at one Manali plant beside the Chennai refinery, with capacity debottlenecked from 36,000 to 48,000 tonnes a year in 2023.
What does Kothari Petrochemicals sell?
One product in many grades: polyisobutylene, reported as a single segment, with no subsidiaries. PIB goes into lubricant additives (the core, as the base for dispersants and viscosity modifiers), fuel additives, tyre inner liners and rubber, and plastics, paints, adhesives and sealants. The world market is about 1.12 million tonnes in 2026 growing at about 3.3% a year to about 1.32 million tonnes by 2031 on Mordor Intelligence estimates. FY26 production was 39,163 tonnes, about 90% of plan and about 82% of the 48,000 tonne nameplate.
What do the financials show?
Revenue of Rs 382 crore, Rs 482 crore, Rs 596 crore, Rs 577 crore and Rs 591 crore across FY22 to FY26, with PAT of Rs 33 crore, Rs 39 crore, Rs 64 crore, Rs 66 crore and Rs 72 crore and EPS of Rs 5.59, Rs 6.66, Rs 10.84, Rs 11.19 and Rs 12.32. The expansion half (to FY24) was volume; the plateau half (FY24 to FY26) was margin, with operating margin back to about 16% in FY26. Q1 FY27 softened at the top: revenue Rs 146 crore, down about 9% year on year, PAT Rs 17 crore, in the quarter management later said was hit by raw material constraints that eased after government directions in early July 2026.
Who runs Kothari Petrochemicals, and is governance clean?
Nina Bhadrashyam Kothari chairs the board, Arjun B Kothari is Managing Director, and promoters hold 72.22% through BHK Trading LLP (about 61.57%) and Nina Kothari (about 10.63%), raised from 70.98% in September 2025, with zero pledging confirmed for FY26 and an unmodified FY26 audit opinion. The operating delivery record is strong. The governance deduction is the amalgamation itself: a profitable, debt-free petrochemical company absorbing a loss-making group sugar business may simplify the group, but petrochemical minorities are being offered sugar cyclicality and dilution in exchange, and the November 13, 2026 vote is where that question gets answered.
What is Kothari Petrochemicals worth?
At Rs 120: P/E about 9.8x on trailing EPS of Rs 12.32, P/B about 1.9x on book value of about Rs 63.30, price-to-sales about 1.2x on FY26 revenue, EV/EBITDA about 6.9x, and a dividend yield of about 0.83% on a Rs 1.00 dividend. There is no direct listed PIB peer in India; listed chemical names of comparable quality generally trade in the mid-teens to twenties. The discount has named causes: a flat top line, one plant, one feedstock ecosystem, a rating on watch, and merger dilution of roughly a fifth to a quarter of earnings per share if sugar stays loss-making. FY2029 scenarios from FY26 revenue of Rs 591 crore: bear Rs 85 (2% CAGR, 10% PAT margin, 8x), base Rs 170 (7% CAGR, 12.5% margin, 11x, EPS about Rs 15.40), bull Rs 275 (12% CAGR, 14% margin, 14x). The base case is about 42% above the reference price.
What are the key risks?
The sugar amalgamation first (a loss-making, cyclical business, roughly 28% more shares, vote on November 13, 2026), then three flat revenue years with margin as the only growth engine, single-product and single-plant concentration, feedstock dependence on the Chennai refinery ecosystem that put the rating on watch in 2026, a token dividend (about 8% payout) with Rs 104 crore parked in investments, and liquidity: FII holding of about 0.00%, DII of about 0.10%, and a 52-week range of Rs 94.75 to Rs 155.47.
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