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Motilal Oswal Report
Alkyl Amines Chemical Ltd. Q1 FY25 revenue declined 2% YoY to Rs 4 billion, with gross margin of 47% (up 230 basis points YoY) and Ebitdam of 19.8%. Profit after tax stood at Rs 489 million versus our estimate of Rs 407 million.
A new Ethylamines plant was commissioned in FY24, which clocked 60% utilization in H2 FY24. Alkyl Amines has a larger market share versus competition, and with steady growth in demand (5-7% every year) and improved margin, the management is confident of maintaining its market share despite capacity expansions by competition.
Alkyl Amines continues to maintain its market share in ACN. The company has applied for an anti-dumping duty Add and expects interim relief in FY25, which could lead to a market share gain for Alkyl Amines Chemical. Currently the impact from imports is to the tune of 15-20% of revenues from ACN.
We keep our estimates unchanged. We expect a compound annual growth rate of 22%/33%/38% in revenue/Ebitda/earning per share during FY24-26 (due to a lower base in FY24).
The stock is trading at 36.8 times FY26E earning per share of Rs 55.8 and 23.2 times FY26E enterprise value/Ebitda.
We reiterate our 'Neutral' rating on the stock and value it at 35 times FY26E earning per share to arrive at our target price of Rs 1,955.
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