KR Choksey is bullish on Alkyl Amines Chemicals has recommended buy rating on the stock with a target price of Rs 762 in its research report dated February 06, 2018.
KR Choksey's research report on Alkyl Amines Chemicals
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 13.5% q-o-q while PAT margin stood at 9.8% declining by 269 bps y-o-y but increasing by 23 bps q-o-q.
Further, with net debt of INR 973 and ROCE/ROE for the Company standing at 22%/20%, the company trades at trailing P/E of 25x. Consequently, going forward, we estimate the debt/equity ratio to improve to 0.26x and expect ROCE/ROE to scale to 28%/24% by FY20E. At CMP of INR 647, we maintain our “BUY” rating on the stock with target price of INR 762 assigning a P/E of 15x on FY20E EPS 50.8 resulting into an upside of 17.8%.
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