Alkyl Amines Q2 Results Review - Healthy Volume Growth Offset By Pricing Pressure: Motilal Oswal

Motilal Oswal Report

Alkyl Amines Chemicals Ltd. has boosted its aliphatic amines capacity by ~30% in FY24. The total capacity stands at ~200 ktpa (including derivatives and specialty chemicals). Additionally, Alkyl Amines is venturing into new specialty products that are likely to improve its margins amid robust demand (near-term headwinds persist) for amine derivatives and specialties.

Over FY24-27, we estimate a ~20% revenue CAGR and a 37% EPS CAGR (due to a lower base in FY24). The key risk to our outlook is high competition (domestic and imports, mainly from China), leading to limited pricing power.

Commodity nature of some of the products could also make AACL susceptible to raw material price fluctuations. Upside risk could come from the implementation of Add.

The stock is trading at ~42 times FY26E EPS and ~26 times FY26E enterprise value/Ebitda. We reiterate our Neutral rating on Alkyl Amines with a target price of Rs 2,095, based on 35 times Sep-26E EPS.

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