Why did Pondy Oxides’ share price fall 8% despite reporting 153% YoY profit growth?

Synopsis: A stock that has delivered a 94 percent compounded return over the past three years has now announced its Q3 FY26 results. The company operates in metal recycling and manufacturing, with a product portfolio spanning lead, aluminium, and copper.

A small cap metal recycling stock has been in the focus as the company has announced its Q3FY26 result that included a 153 percent YoY profit growth along with its 9M profit value increase by 130 percent. Even after an outstanding result the company stock dipped by 8 percent post the result announcement. 

With a market cap of Rs 3,816 Cr, Pondy Oxides & Chemicals Ltd saw its stock hit an intraday low of Rs 1163  which is 8 percent lower than the previous close of Rs 1263. While, the company stock has given a compounded return of 94 percent in the last three years.

Q3FY26 Result

In the latest quarterly result the company has seen its revenue from operations increase by 54 percent YoY, from Rs 502 Cr in Q3FY25 to Rs 776 Cr in Q3FY26, while the QoQ increased by 22 percent from Rs 635 Cr. The net profits grew by 153 percent going from Rs 15 Cr in Q3FY25 to Rs 38 Cr in Q3FY26, while the QoQ increased by 5 percent from Q2FY26’s Rs 36 Cr.

In 9M numbers of the fiscal year, the company saw its revenue from operations increase by 32 percent YoY, from Rs 1533  Cr in 9MFY25 to Rs 2023 Cr in 9MFY26. The net profits for the same period grew by 129 percent going from Rs 41 Cr to Rs 94 Cr.

The company has a 3 year sales CAGR of 12 percent, while the TTM is at 35 percent. The company’s 3 year profit CAGR is at 11 percent, while the TTM number is at 100 percent. The company also has a ROCE of 17 percent and a ROE of 14 percent.

Share Slump Reason

Even though the company witnessed a sales surge of 54 percent YoY as mentioned above the company also saw its expenses in Q3FY26 witness a notable increase compared to Q2FY26, as the total expenses rose by 23 percent QoQ from Rs 595 crore to Rs 731 crore, while the YoY surge was at 49 percent from Rs Rs 491 . 

This uptick in total expenses was primarily fueled by a 785 percent QoQ jump in purchases of trading goods as the numbers for the same went from Rs 14 lakh to Rs 1.2 Cr. Apart from that a 40 percent increase was also noticed in cost of materials consumed as this went from Rs 536 Cr in Q2FY26 to Rs 751 Cr in Q3FY26, but an increase in this expense is still justifiable with a 54 percent QoQ revenue growth.

Keeping aside the increased expense point, we could tell the investors were even expecting an even better result due to growth factor and opportunities currently available in the copper industry as the company has already mentioned in its previous con call that the company is planning to expand its already existing copper business more due to better margins and have a stronger revenue potential.

These points were already factored into the share price by investors before the latest result was even announced, hence this could be a reason for the market to react negatively to the company’s latest quarterly result.

Pondy Oxides & Chemicals Ltd, incorporated in 1995 and headquartered in Chennai, is a leading manufacturer of lead, lead alloys, and other non-ferrous metals. The company supplies high-quality metals for industrial applications, catering to sectors like batteries, construction, and manufacturing. 

With a focus on innovation and consistent quality, Pondy Oxides has established a strong presence in the Indian metals market while expanding its reach to international clients.  The company’s client list includes – TVS, Nilkamal, Panasonic, SAIL and TATA batteries.

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