Neutral Alkyl Amines; target of Rs 2950: Motilal Oswal

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26 Aug, 2025 12:21

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Alkyl Amines (AACL) reported marginally lower-than-estimated revenue in 3QFY23. Decline in prices of some products hit its 3Q performance. Though gross margin was steady at 49%, EBITDA came in below our estimate at INR697m with EBITDAM at 17.9% (down 190bp QoQ). Demand from the Pharmaceuticals sector for two of its products (Ethyl Amines and DMAPA) has been hit by inventory buildup and supply chain constraints. That being said, the long-term guidance of 10-15% volume growth remains intact as the management focuses on volume growth. Capacity expansion of Ethyl Amines in Kurkumbh (100tpd capacity) is on track and it is likely to be commissioned by May/Jun’23, with mechanical completion being planned in Apr’23. Capex envisaged for the same is INR4b. AACL had previously announced that it would be manufacturing four to five new products in the specialty segment, which would be developed in its own R&D labs. The company dispatched the first tanker of one of the products in Feb’23 with the other products to be commissioned by Sep’24E.

The stock is trading at 42x FY24E EPS and 28x FY24E EV/EBITDA. We reiterate our Neutral rating on the stock, and value it at 40x Dec’24E EPS to arrive at our TP of INR2,950.

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