Why Kiri Industries Share Price is Rising

The dyes and chemical sector in India is a vital part of the country's industrial ecosystem, supporting industries like textiles, pharmaceuticals, and plastics.

India is among the largest producers and exporters of dyes globally, driven by strong domestic demand and growing international exports. This sector has benefited from India's cost advantages and increasing global focus on supply chain diversification.

Kiri Industries is a prominent player in this space, specialising in the production of dyes, intermediates, and basic chemicals.

With a strong presence in domestic and international markets, the company is known for its innovative products and sustainable practices. It caters to industries like textiles, paper, and leather, earning a reputation as a reliable supplier.

Recently, Kiri Industries' share price has surged by 25.2% in just five days, drawing significant investor interest. This rally reflects growing market optimism about the company's performance and potential.

Let's take a look at the factors driving the rally in Kiri Industries.

#1 Good Quarterly Results

Kiri Industries reported significant improvements in its financial performance for Q2 FY25, compared to the same quarter in the previous year.

During the quarter under consideration, revenue from operations increased 20.3% YoY to Rs 2.7 billion (bn), up from Rs 2.3 bn in Q2FY24.

Total income, including other revenue, rose by 21.4% YoY, reaching Rs 2.8 bn from Rs 2.32 bn in the same period last year. This reflects better demand and operational growth within the dyes and chemicals sector.

Total expenses also increased 10.9% YoY to Rs 2.85 bn compared to Rs 2.57 bn in Q2FY24. The cost of materials consumed grew 2% YoY to Rs 1.53 bn, highlighting stable raw material procurement despite inflationary pressures.

On a profitability basis, Kiri Industries significantly reduced its net loss. The company reported a net loss of Rs 126.9 million (m) in Q2FY25, a substantial improvement from the net loss of Rs 268 m in Q2FY24.

This improvement can be attributed to revenue growth outpacing the rise in expenses and income from associated entities contributing positively to the bottom line.

The rally in Kiri Industries share price in recent days is a result of growing investor confidence. The reduction in net loss, coupled with strong revenue growth, signals an improving financial trajectory.

The market remains optimistic about the company's position in the dyes and chemicals sector and its ability to capitalise on favourable industry trends.

#2 Legal Dispute Development

On 12 November 2024, the Supreme Court of Singapore held a key hearing in the ongoing legal case between Kiri Industries and Senda International Capital. The dispute revolves around the valuation and enforcement of Kiri Industries' stake in DyStar Global Holdings, a joint venture between the two companies.

Kiri Industries is seeking to enforce a valuation determined by the Singapore International Commercial Court (SICC). The SICC had previously valued Kiri's stake in DyStar at US$ 603.8 m. However, enforcing this valuation has faced delays due to disagreements over its accuracy and the terms of payment.

The 12 November hearing marked an important step in resolving these conflicts. The court examined arguments from both sides, focusing on enforcing the valuation and resolving financial obligations. While no final ruling has been issued yet, the hearing suggests movement toward resolving the dispute.

Investors have shown significant interest in this case, given its potential impact on Kiri Industries' finances. A favorable outcome could allow Kiri to realise considerable value from its DyStar stake. This would likely improve the company's financial position and benefit shareholders.

Kiri Industries' management has expressed optimism about the case. During the Q2FY25 earnings call, they highlighted the importance of the court's decision. They emphasised their commitment to enforcing the valuation to unlock shareholder value.

The ongoing legal proceedings remain a critical focus for stakeholders. A positive ruling could significantly influence Kiri Industries' financial trajectory. Investors have responded to this progress, driving the company's share price higher, anticipating a favourable resolution.

What Next?

Kiri Industries is focused on a transformative journey through its diversification into copper production and fertiliser manufacturing.

The first phase of the copper project, set to begin operations by 2026, will produce 200,000 tons of copper, expanding to 500,000 tons by 2027.

This project, with an estimated cost of Rs 80 bn, is expected to generate over Rs 500 bn in annual revenue once fully operational, contributing to more than 80% of the company's future revenue.

The remaining fertiliser production will complement copper operations as a byproduct, with a planned capacity of 1 m tons for DAP and NPK fertilizers.

The DyStar sale proceeds, anticipated by March 2025, will play a pivotal role in funding these projects. About Rs 30 bn will be allocated to the copper project, while the remaining funds will strengthen working capital and reduce debt. Kiri aims to maintain a 2:1 debt-equity ratio for its new ventures, ensuring financial stability.

The company has already secured critical raw material agreements to mitigate supply risks. Its strategic location near the Pipavav Port will facilitate imports and exports, enhancing logistical efficiency.

By adhering to strict environmental standards, including zero liquid discharge and renewable energy usage, Kiri aims to align its copper production with global ESG standards, positioning itself as a responsible industry leader.

Looking ahead, Kiri plans to address India's significant demand-supply gap in copper, which is expected to triple by 2030. The company aims to reduce reliance on imports while capitalising on domestic demand.

How Kiri Industries Share Price has Performed Recently

In the past five days, Kiri Industries share price has rallied 25.2%. In the last month, it is up 58.9%.

In 2024, so far its share price has rallied 42.1% and it has surged 116.9% in the last one year.

The stock touched its 52-week high of Rs 598 on 21 November 2024 and a 52-week low of Rs 269 on 21 November 2023.

About Kiri Industries

Kiri Industries is engaged in the business of manufacturing and exporting a wide range of dyes, dye intermediates, and basic chemicals from India.

To know more about the company, check out Kiri Industries financial factsheet and its latest quarterly results.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...