Alkyl Amines Chemicals Ltd. share price target

Alkyl Amines Chemicals (AACL)’s 3QFY25 revenue increased 15% YoY to INR3.7b. The growth was mainly volume-driven, though the company continues to face pricing pressure from Chinese players.

Alkyl Amines (AACL)’s 1QFY25 revenue declined 2% YoY to INR4b, with gross margin of 47% (up 230bp YoY) and EBITDAM of 19.8%.

AACL focuses on product innovation, waste reduction, and environmental impact, with plans to triple its R&D team and implement a new by-product isolation process
in FY25. The company has increased R&D expenses, from 0.43% of revenue in FY19 to 0.65% in FY24 (INR93m), to strengthen its leadership in amines.

AACL’s 4QFY24 revenue declined 14% YoY to INR3.6b, with agrochemicals
seeing destocking and pharma witnessing demand stabilization. Sales volumes
increased from the pharma sector. Gross margin expanded 270bp YoY to
49.2%, while EBITDAM expanded 50bp to 19.3% in 4Q. PAT declined 21% YoY
to INR385m (our est. INR314m)

Chemicals: Alkyl Amines stands out Oil & Gas: CGD to shine

(1) Backed by robust demand by the Pharma industry, (2) 15kTPA capacity addition of Methyl Amines at Dahej, and (3) Enhanced Acetonitrile capacity by 15kTPA to 33, will help AACL garner market share. With strong return ratios (RoIC of >25% over FY20-22E) and attractive valuations (trading at 13.3/11.6 FY21/22E EPS), Alkyl Amines is our top pick in the Chemicals space. We maintain BUY on AACL post a beat on our EBITDA estimates in 1HFY20. We bump-up our EBITDA margins by ~200-300bps over FY20-22 to factor in AACLs enhanced bargaining power and improved product mix. Our revised target price is Rs 1,770 (22x Sep-FY21 EPS).

High intrinsic profitability (RoIC 20%+), market share gains in Methyl Amines, and a prudent management make AACL an attractive bet at 13.6/11.6 FY21/22E EPS. While margins may remain flat as Methyl Amines share in the mix rises, fresh capacities of Amine Derivatives will help them recover. We value AACL at 22x Jun-21E EPS and maintain BUY with a TP of Rs 1,369. Post a blowout (but unsustainable) performance in 1QFY20, we maintain faith in Alkyl Amines owing to the upcoming expansion in Methyl Amines. Maintain BUY

Strong return ratios (RoIC to improve from 18.9% in FY19 to 19.8% in FY21E), gain in market share in Methyl Amines and its derivatives and a prudent management make AACL an attractive bet at current valuations (trading at 13.4 FY21E EPS). We are valuing AACL at 22x Mar'21E EPS and maintain a BUY rating with a TP of Rs 1,313. Strong return ratios (RoIC to improve from 18.9% in FY19 to 19.8% in FY21E), gain in market share in Methyl Amines and its derivatives and a prudent management make AACL an attractive bet at current valuations (trading at 13.4 FY21E EPS). We are valuing AACL at 22x Mar'21E EPS and maintain a BUY rating with a TP of Rs 1,313. Despite an underwhelming Q4FY19 performance, we urge investors to keep their faith intact in AACL owing to the (1) Impending gain in market share in the Methyl Amines space, (2) Expanding margins as the share of derivatives in the total product mix increases. Maintain BUY

We are valuing AACL at 22x Dec'20 EPS and maintain a Buy rating with a TP of Rs 1,306. Alkyl Amines (AACL) reported another strong quarter with Sales/EBITDA/PAT growing at 38.9/44.3/47.4% YoY to Rs 2.12bn/386mn/221mn respectively. AACL continues to ramp up its newly commissioned Methyl Amines capacity (30KTPA) in Dahej and is operating at ~70% utilization.

EBIDTA during the quarter came in at INR 369 mn which was up by 54.3% YoY and down by 8.5% QoQ. OPM stood at 20.7% impacted by changes in inventory and was broadly in line with our estimates of 20.8%. Further, the bottom line stood at INR 177 mn growing by 40% on YoY basis while taking a hit of 24% on sequential basis mainly on account...

We are valuing AACL at 22x Jun'20 EPS and maintain a Buy rating with a TP of Rs 940. Alkyl Amines reported numbers in line with our estimates; Alkyl Amines reported Sales/EBITDA/PAT growth of 20.9/54.3/40.1% YoY to Rs 1.78bn/Rs 369mn/Rs 177mn respectively. EBITDA and PAT declined sequentially by 8.6/24.2% (AACL had reported the highest quarterly PAT in 4QFY18).

We recently met Kirat Patel, Executive director at Alkyl Amines Chemicals (Alkyl) to get an insight into the amines chemistry business and the company's role in the value chain. Alkyl is a key player in the oligopolistic ammonia chemistry segment in India. The company was established in 1979 and has 12 manufacturing plants in western India (Maharashtra, Gujarat) with a state-of-the-art R&D; unit in Pune. Alkyl manufactures primary chemicals in aliphatic amines domain like methylamines, ethylamine and its derivatives and specialities like DMAHCL, acetonitrile,...

We maintain Buy on Alkyl Amines and value AACL at 22.0x FY20E EPS with a target price of Rs 900/share. Alkyl Amines reported a strong 4QFY18 with Sales/EBITDA/PAT growing by 32.7%/86.0%/112.9% to Rs 1.74 bn/Rs 404mn/Rs 233mn. AACL reported numbers ahead of our expectations due to a better mix and higher realizations of some of its key products (Acetonitrile realizations were up 15.8% YoY to Rs 150/kg).

The company reported top line for the quarter at INR 1531 mn as against INR 1364 mn for Q3FY17 and INR 1381 mn for Q2FY18; which grew by 12.3% y-o-y and 10.9% q-o-q. The top line was in line with our expectations of INR 1498 Mn showing a deviation of 2%. EBIDTA during the quarter stood at INR 267 mn; down by 10% y-o-y; up by 10.7% q-o-q on account of higher than expected raw material costs. This resulted in margin erosion by 429 bps y-o-y and 3 bps q-o-q standing at 17.4%. Further, PAT for the quarter came in at INR 152 mn down 10% y-o-y; up...

Net Income for Q2FY18 came in at INR 1381 mn as against INR 1241 mn for Q2FY17 and INR 1474 mn for Q1FY18; which grew by 11.3% y-o-y but de-grew by 6.3% q-o-q. EBIDTA during the quarter stood at INR 241 mn; up by 20.7% y-o-y and 3.8% q-o-q, while EBITDA margins surged to 17.5%. Operating margins increased by 135 bps y-o-y and 170 bps q-o-q assisted by margin lucrative product mix....

Strained margins, long-term story Intact; Maintain BUY Alkyl Amines Chemicals Ltd. has reported its Q4FY17 result with a revenue growth of 8.3%/-3.8% YoY/QoQ, respectively, to ~Rs. 1,311 mn. The EBITDA of the Company stood ~Rs. 212 mn, a reduction of ~21.6%/28.7% YoY/QoQ, with a margins being contracted to ~16.1% vs...

Strong Quarter led by high Margins; Maintain BUY Alkyl Amines Chemicals Ltd., reported strong margin growth in Q4FY16 result. It has posted net sales of ~Rs.1210 mn, growth of ~3%/8.5%...

Valuation: Alkyl Amines Chemicals Ltd. trades at 12.4x one-year forward P/E, and we expect that the following factors will further drive the stock upside: 1) Growth of pharmaceuticals, agrochemicals and other industries AACL serves, 2) Fast paced...