Buy Balaji Amines; target of Rs 3790: KR Choksey

KR Choksey's research report on Balaji Amines

During the quarter, Balaji Amines Ltd (BAL) reported robust revenue of INR 5,859mn (+3.73% YoY / -6.62% QoQ). Such performance was mainly driven by higher volumes from amines & specialty chemical segments. On the operational front, EBITDA in Q3FY23 stood at INR 1,278mn (-19.52% YoY / -26.13% QoQ), OPM declined by 630bps/576bps YoY/QoQ. The decline in operating margin was mostly attributable to pharma and API industry contraction. Net Profit in Q3FY23 stood at INR 838mn showing a decline of-17.6%/-29.29% on YoY/QoQ basis, with NPM at 14.3%. EPS during the quarter came at 19.3 against 27.6 in the same quarter last year.

Outlook

At CMP, BAL is trading at 21.28x/16.56x its FY23E/24E earnings. We remain positive as it will sustain growth potential and value the stock at a target P/E multiple of 23x FY24E, which yields a price of INR 3,790 per share(Earlier target price INR 4,313 per share) and thus maintain ‘BUY’ recommendation.