Ami Organics Q3 Results Review - Pricing Pressures Impact Growth: IDBI Capital

IDBI Capital Report

Ami Organics Ltd.'s posted a subdued financial performance in Q3 FY24. While revenue grew by 9% YoY, adjusted profit after tax declined by 25% YoY. Gross margins stood at 43% as against a usual run rate of 46-48%. Ebitda margins stood at 16% as against a usual run-rate of 20-22%.

Lower gross margins were on account of higher price erosion and higher sale of low margin products namely specialty chemicals and domestic pharma intermediate sales.

We factor in the revenue guidance cut by the management owing to deferment in product launch of a key product coupled with China led pricing pressures.

We lower our FY24/FY25/FY26 PAT by 23%/27%/13% to factor in lower growth of the pharma and specialty chemical business.

We downgrade our rating from 'Buy' to Hold with target price of Rs 1,134 (Previous target price: Rs 1,300) assigning a target multiple of 35 times on FY26 earning per share.

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