HP adhesives — Annual report 2023 summary

Brief Summary:

• Sealants and adhesives manufacturer situated near Mumbai in Raigad district
• Total Capacity of 13,000 MTPA
• 1250+ distributors and 5 depots
• 75% of revenue through distributors and other 25% through pipe manufacturing cos
• Owner of brands like HP, Strong weld, Strong fix, Strong seal

Product line

Product wise revenue

Product portfolio:

1-Solvent Cement: — 58.3% of revenue

• Solvent Cement is ideal for PVC, CPVC, and ABS pipes and fittings
  Revenue CAGR of 25.8%
• More than 300 SKU’s
• Marketed under brands like HP, strong weld
• Most selling SKUs are 118 ml tins and 237 ml tins.

2-Silicon sealants: — 18.4% of revenue

• Silicone Sealants are versatile adhesives used in home improvement, construction, automotive, households, and many other industries.
• Revenue CAGR of 97%
• The Company offers silicone sealants in 260 ml, 280 ml, and 300 ml cartridges, available in a range of colours.
• The Company manufactures and sells silicone sealants under the ‘Strong Seal’ brand.

3-Contact adhesives and PVA adhesives: 6.9% of revenue

• PVA Adhesives, also known as White Glue or Carpenter’s glue, are water-based and widely used in households and industries for carpentry and woodworking.
• Contact Adhesive is extensively used across diverse industries, including furniture construction, automotive, aerospace, footwear, foam and furnishing.
• Marketed under brands like Strong Fix

4-Ball valves and tapes: 14.3% of revenue

• A ball valve is a shut off valve that controls the flow of water by means of a rotary ball.
• Revenue CAGR of 71.2%
• Supports the growth in solvent cement.

5-Epoxy Putty — New launch

Opportunities:

• Distribution model has changed from B2B led selling mainly to pipe manufacturers to a retail model
• Adhesive, sealant market to grow at 7.5% until 2028
• Key demand drivers are 1)construction, 2)automotive, 3)woodwork
• Total addressable market for HP is 7500 cr

1)Construction:

• Solvent cement adhesives used in joining PVC, CPVC pipes
• Silicon sealants are used in wall covering, pre-finish panels, lamination and waterproofing of joints

2)Automotive:

• Contact adhesives and silicone sealants are used extensively in autos

3)Woodworking:

• Related directly to real estate growth
• PVA adhesives and Contact adhesives are widely used for furniture, carpentry, mattresses, upholstery among others

Others:

• Borrowing has reduced from 36 cr in Mar 2020 to 9 cr in Mar 2023
• Working capital has increased from 97 days in Mar 2020 to 107 days in Mar 2023
• Promoter own 71% of stock, Quant small cap owns 2.09%.