Neutral Alkyl Amines; target of Rs 1955: Motilal Oswal

Motilal Oswal's research report on Alkyl Amines

Alkyl Amines (AACL)’s 1QFY25 revenue declined 2% YoY to INR4b, with gross margin of 47% (up 230bp YoY) and EBITDAM of 19.8%. PAT stood at INR489m vs. our estimate of INR407m. A new Ethylamines plant was commissioned in FY24, which clocked 60% utilization in 2HFY24. AACL has a larger market share vs. 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. AACL 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 AACL. Currently the impact from imports is to the tune of 15-20% of revenues from ACN.

Outlook

The stock is trading at 36.8x FY26E EPS of INR55.8 and 23.2x FY26E EV/EBITDA. We reiterate our Neutral rating on the stock, and value it at 35x FY26E EPS to arrive at our TP of INR1,955.