Motilal Oswal's research report on Alkyl Amines
Alkyl Amines (AACL)’s 1QFY24 revenue declined 13% YoY, in line with expectation, primarily due to the current pricing conditions. Volumes grew ~15% YoY/10-12% QoQ. Gross margin contracted to 44.7% in 1QFY24. EBITDA was marginally ahead of our forecast at INR740m, driven by lowerthan-anticipated expenses. This resulted in an EBITDAM of 18.1% (-60bp QoQ) for the quarter. After a period of post-Covid slowdown caused by inventory buildup, the pharma industry’s outlook is now moderately optimistic. The company is experiencing a strong demand for its products from the agrochemicals sector. Management's guidance of a 10-15% volume growth remains unchanged.
Outlook
We have cut of EBITDA/ EPS estimate by 9%/ 10% for FY24 while keeping estimates for FY25 broadly unchanged. The stock is trading at 35x FY25E EPS and 24x FY25E EV/EBITDA. We reiterate our Neutral rating on the stock, and value it at 35x FY25E EPS to arrive at our TP of INR2,350.
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