20 February 2025
Company Update
Alkyl Amines
REDUCE
Bumpy road ahead
Capacity addition in methylamines and its derivatives by domestic players
shall limit volume growth and expansion in margins. We expect volume growth
to remain below 10% YoY in FY26. Acetonitrile prices and its spread over key
raw material are both at six years’ low. Acetonitrile is one of the key products
for the company which shall contribute ~15% in FY25/26E revenue. We expect
EBITDA margin to remain ~18% in FY25/FY26. EBITDA/APAT could grow at a
CAGR of 19/18% over FY25-28E and RoE/RoCE could improve from 15.1/14.1%
in FY25E to 17.3/16.4% in FY28. Currently, the stock is trading at 41.7/31.1
FY26/27E. We upgrade Alkyl Amines Chemicals ltd (AACL) to REDUCE from
SELL with a target price of INR 1673 as stock has corrected ~23% in last three
months.
Capacity addition shall put pricing in methylamines chain under pressure
▪
▪
INR1,659
Target Price
INR1,673
NIFTY
22,945
KEY CHANGES
OLD
NEW
Rating
SELL
REDUCE
INR1,642
INR1,673
FY25E
FY26E
+4.8%
-13.1%
Price Target
EPS %
KEY STOCK DATA
Domestic demand for methylamines exceeds 100ktpa, with approximately 2025ktpa needed if India were to start producing major derivatives (e.g.,
Dimethyl Formamide, N-methyl pyrrolidone, etc.), which are currently being
imported.
Balaji Amines has commissioned a 40ktpa methylamine (mono, di, tri) plant
in November-24. The domestic capacity has surpassed domestic demand post
this capacity addition. Aarti Drugs is the leading producer of metformin in
the world, an anti-diabetic drug. Dimethyl Amine-HCl (DMAHCL) is the key
raw material for metformin. The company is the largest domestic consumer
of DMAHCL. In its strategy to expand into backward integration, the
company is setting up a ~36ktpa methylamine plant with forward integration
of DMAHCL facility. This greenfield project at Sayakha, Gujarat, shall be
commissioned in the current quarter. Methylamines are largely sold in the
domestic market, owing to challenges in exporting basic amines. Thus, we
expect the price of methylamine and its derivatives to remain benign owing
to the supply glut in the market. The imposition of import tariffs by the US
government will force Chinese chemical manufacturers to look towards new
markets for its products. We believe that aggressive dumping of products by
Chinese chemical manufacturers may impact product prices in India for Alkyl
Amines.
Financial summary
Bloomberg code
AACL IN
No. of Shares (mn)
51
Map (INR bn) / ($ mn)
82/943
6m avg traded value (INR mn)
52 Week high / low
239
INR 2,499/1,570
STOCK PERFORMANCE (%)
3M
6M
12M
Absolute (%)
(16.7)
(20.2)
(27.8)
Relative (%)
(15.0)
(14.6)
(32.7)
SHAREHOLDING PATTERN (%)
Sep-24
Dec-24
Promoters
71.96
72.00
FIs & Local MFs
1.53
1.76
FPIs
3.20
3.23
Public & Others
23.31
23.00
Pledged Shares
0.00
0.00
Source: BSE
Year Ending March
(Rs mn)
3Q
FY25
2Q
FY25
QoQ
(%)
3Q
FY24
YoY
(%)
Net Sales
3,900
4,149
(6.0)
3,220
21.1 16,823 14,406 16,871 18,057 21,790
EBITDA
691
735
(6.0)
596
16.0
3,431
2,507
3,078
3,311
4,310
APAT
471
475
(0.7)
334
41.2
2,287
1,489
2,029
2,035
2,722
Diluted EPS (Rs)
9.2
9.3
(0.7)
6.5
41.2
44.7
29.1
39.7
39.8
53.3
P/E (x)
37.1
57.0
41.8
41.7
31.1
EV / EBITDA (x)
24.9
33.7
27.1
24.9
19.1
RoE (%)
21.2
12.2
15.1
13.5
16.1
FY23
FY24 FY25E FY26E FY27E
Source: Company, HSIE Research
Change in estimates
Y/E Mar
CMP (as on 19 Feb 2025)
FY25E Old FY25E New Change (%)
FY26E Old FY26E New Change (%)
EBITDA (INR mn)
3,148
3,078
-2.2
3,736
3,311
-11.4
Adj. EPS (INR/sh)
37.9
39.7
4.8
45.8
39.8
-13.1
Source: Company, HSIE Research
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Nilesh Ghuge
nilesh.ghuge@hdfcsec.com
+91-22-6171-7342
Harshad Katkar
harshad.katkar@hdfcsec.com
+91-22-6171-7319
Prasad Vadnere
prasad.vadnere@hdfcsec.com
+91-22-6171-7356
Dhawal Doshi
dhawal.doshi@hdfcsec.com
+91-22-6171-7361
Alkyl Amines: Company Update
Exhibit 1: Realisation of Dimethylamine
Exhibit 2: Realisation of Methyl amino propylamine
Source: Company, HSIE Research
Source: Company, HSIE Research
Acetonitrile prices are at a six-year low
Alkyl Amines is the largest domestic producer of acetonitrile with a production
capacity of ~30 ktpa. Acetonitrile is one of the key products for the company which
shall further contribute ~15% in FY25E revenue as per our estimate. In addition, the
per-unit gross profit for acetonitrile was the highest in H1FY21 when its prices were at
a peak. The company reported a gross margin of more than 57% during this period.
Currently, the prices of acetonitrile and the acetonitrile-acetic acid spread are both at a
six-year low (Exhibit 3 and Exhibit 4), and the per-unit gross profit has corrected more
than half from the peak in 1HFY21. Thus, we expect gross margin to remain benign in
the ensuing quarters.
Exhibit-3: Indexed Acetonitrile prices are at six-year low
Source: Company, HSIE Research
Note:- Acetonitrile prices are indexed from the price of January 2019
Page | 2
Alkyl Amines: Company Update
Exhibit 4: Indexed Acetonitrile and acetic acid cracks
Exhibit 5: Indexed Gross Margin
Source: Company, HSIE Research
Note:- Acetonitrile acid cracks are indexed from the price of FY19
Source: Company, HSIE Research
Note:- Acetonitrile acid cracks are indexed from the price of FY19
Exhibit 6: Alkyl Amines P/E band chart
Exhibit 7: Alkyl Amines P/BV band chart
Source: NSE, Company, HSIE Research
Source: NSE, Company, HSIE Research
Page | 3
Alkyl Amines: Company Update
Financials (Consolidated)
INCOME STATEMENT
(INR mn)
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
FY28E
Net Revenues
Growth (%)
Material Expenses
Employee Expenses
Other Operating Expenses
EBITDA
EBITDA Margin (%)
EBITDA Growth (%)
Depreciation
EBIT
Other Income (Including EO Items)
Interest
PBT
Tax
RPAT
Minority Interest
EO (Loss) / Profit (Net Of Tax)
APAT
PAT Growth (%)
AEPS
AEPS Growth (%)
12,424
25.1
5,231
927
1,975
4,291
34.5
65.7
291
4,001
70
63
4,007
1,054
2,953
15,420
24.1
8,356
881
2,931
3,252
21.1
(24.2)
348
2,904
150
33
3,021
772
2,249
16,823
9.1
8,597
976
3,819
3,431
20.4
5.5
452
2,980
139
33
3,086
799
2,287
14,406
(14.4)
7,676
952
3,272
2,507
17.4
(26.9)
589
1,918
151
44
2,025
536
1,489
16,871
17.1
9,385
1,028
3,380
3,078
18.2
22.8
669
2,409
301
1
2,709
680
2,029
18,057
7.0
10,021
1,130
3,594
3,311
18.3
7.6
784
2,527
190
1
2,717
682
2,035
21,790
20.7
12,216
1,255
4,010
4,310
19.8
30.2
887
3,422
213
1
3,634
912
2,722
25,816
18.5
14,816
1,380
4,429
5,191
20.1
20.5
986
4,206
221
1
4,426
1,111
3,315
2,953
37.2
57.8
64.3
2,249
(23.9)
44.0
(23.9)
2,287
1.7
44.7
1.7
1,489
(34.9)
29.1
(34.9)
2,029
36.3
39.7
36.3
2,035
0.3
39.8
0.3
2,722
33.8
53.3
33.8
3,315
21.8
64.9
21.8
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
FY28E
102
7,822
7,925
216
216
102
9,796
9,898
227
227
102
11,587
11,689
855
855
102
12,569
12,671
6
6
102
14,193
14,295
6
6
102
15,820
15,923
6
6
102
17,862
17,964
6
6
102
20,348
20,451
6
6
81
414
8,635
64
472
10,661
129
560
13,232
149
737
13,564
149
774
15,224
149
813
16,890
149
853
18,973
149
896
21,502
4,580
1,376
6,290
1,426
7,187
3,525
10,892
356
11,009
370
11,610
385
13,208
400
13,406
416
126
91
6,174
1,219
2,280
1,563
1
216
5,279
1,790
1,028
2,818
2,461
8,635
529
92
8,338
1,645
2,767
626
2
336
5,376
2,285
767
3,052
2,324
10,661
104
97
10,913
1,837
2,584
182
1
384
4,988
1,897
771
2,669
2,320
13,232
51
103
11,403
1,720
2,217
314
1
182
4,434
1,719
554
2,273
2,161
13,563
51
108
11,539
2,014
2,597
1,525
1
200
6,337
2,013
639
2,652
3,685
15,224
51
114
12,160
2,155
2,779
2,469
1
220
7,624
2,155
740
2,895
4,730
16,890
51
120
13,779
2,601
3,354
2,498
1
242
8,696
2,600
902
3,502
5,194
18,973
51
126
13,999
3,082
3,973
4,395
1
266
11,718
3,080
1,135
4,215
7,503
21,502
Source: Company, HSIE Research
BALANCE SHEET
(INR mn)
SOURCES OF FUNDS
Share Capital
Reserves
Total Shareholders’ Funds
Long-term Debt
Short-term Debt
Total Debt
Minority Interest
Long-term Provisions & Others
Net Deferred Tax Liability
TOTAL SOURCES OF FUNDS
APPLICATION OF FUNDS
Net Block
CWIP
Goodwill
Investments
LT Loans & Advances
Other Non-Current Assets
Total Non-current Assets
Inventories
Debtors
Cash & Equivalents
ST Loans & Advances
Other Current Assets
Total Current Assets
Creditors
Other Current Liabilities
Total Current Liabilities
Net Current Assets
TOTAL APPLICATION OF FUNDS
Source: Company, HSIE Research
Page | 4
Alkyl Amines: Company Update
CASH FLOW STATEMENT
(INR mn)
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
FY28E
Reported PBT
EO items
Interest Expenses
Depreciation
Working Capital Change
Tax Paid
OPERATING CASH FLOW ( a )
Capex
Free Cash Flow (FCF)
Investments
INVESTING CASH FLOW ( b )
Debt Issuance/(Repaid)
Interest Expenses
FCFE
Share Capital Issuance
Dividend
Others
FINANCING CASH FLOW ( c )
NET CASH FLOW (a+b+c)
EO Items, Others
Closing Cash & Equivalents
4,007
3,021
3,086
2,025
2,709
2,717
3,634
4,426
63
291
183
(1,043)
3,500
(1,564)
1,936
(1,564)
(264)
(63)
1,609
0
(629)
259
(696)
1,240
33
348
(800)
(714)
1,888
(2,107)
(219)
(2,107)
11
(33)
(240)
0
(818)
121
(718)
(937)
33
452
(439)
(712)
2,420
(3,448)
(1,028)
(3,448)
628
(33)
(433)
0
(511)
501
584
(443)
44
589
290
(359)
2,589
(1,125)
1,464
(1,125)
(849)
(44)
572
0
(511)
71
(1,333)
131
1
669
(313)
(643)
2,423
(800)
1,623
(800)
(1)
1,623
(406)
(5)
(412)
1,212
1
784
(101)
(643)
2,757
(1,400)
1,357
(1,400)
(1)
1,356
(407)
(5)
(413)
944
1
887
(435)
(872)
3,216
(2,500)
716
(2,500)
(1)
715
(681)
(6)
(687)
29
1
986
(412)
(1,068)
3,933
(1,200)
2,733
(1,200)
(1)
2,732
(829)
(6)
(836)
1,897
1,563
626
182
314
1,525
2,469
2,498
4,395
FY21
FY22
FY23
FY24
FY25E
FY26E
FY27E
FY28E
57.9
34.5
32.8
23.8
44.4
46.0
40.2
45.8
21.1
19.8
14.6
25.2
26.6
23.6
48.9
20.4
18.5
13.6
21.2
20.0
19.3
46.7
17.4
14.4
10.3
12.2
11.6
11.4
44.4
18.2
16.1
12.0
15.1
15.1
14.1
44.5
18.3
15.0
11.3
13.5
14.5
12.7
43.9
19.8
16.7
12.5
16.1
17.6
15.2
42.6
20.1
17.1
12.8
17.3
19.7
16.4
26.3
1.4
36
67
6
53
4
53
(0.3)
(0.2)
64.3
25.6
1.4
39
66
8
54
4
54
(0.1)
(0.0)
93.1
25.9
1.3
40
56
8
41
3
60
0.2
0.1
93.9
26.5
1.1
44
56
5
44
4
57
(0.1)
(0.0)
47.1
25.1
1.1
44
56
4
44
3
57
(0.5)
(0.1)
4,457.2
25.1
1.1
44
56
4
44
3
58
(0.7)
(0.2)
3,396.8
25.1
1.1
44
56
4
44
3
57
(0.6)
(0.1)
4,544.0
25.1
1.2
44
56
4
44
4
56
(0.8)
(0.2)
5,533.6
57.8
63.5
10.0
155.0
44.0
50.8
16.0
193.7
44.7
53.6
10.0
228.7
29.1
40.7
10.0
247.9
39.7
52.8
7.9
279.7
39.8
55.1
8.0
311.5
53.3
70.6
13.3
351.5
64.9
84.1
16.2
400.1
28.7
10.7
19.4
4.1
2.3
1.8
0.6
37.7
8.6
26.0
1.5
(1.0)
(1.0)
1.0
37.1
7.3
24.9
3.2
(0.8)
(0.1)
0.6
57.0
6.7
33.7
2.9
1.6
0.5
0.6
41.8
5.9
27.1
2.9
1.9
1.9
0.5
41.7
5.3
24.9
3.3
1.6
1.5
0.5
31.1
4.7
19.1
3.8
0.8
0.7
0.8
25.6
4.1
15.5
4.7
3.2
3.1
1.0
Source: Company, HSIE Research
KEY RATIOS
PROFITABILITY (%)
GPM
EBITDA Margin
EBIT Margin
APAT Margin
RoE
RoIC
RoCE
EFFICIENCY
Tax Rate (%)
Asset Turnover (x)
Inventory (days)
Debtors (days)
Other Current Assets (days)
Payables (days)
Other Current Liab & Prov (days)
Cash Conversion Cycle (days)
Net Debt/EBITDA (x)
Net D/E
Interest Coverage
PER SHARE DATA
EPS (Rs/sh)
CEPS (Rs/sh)
DPS (Rs/sh)
BV (Rs/sh)
VALUATION
P/E
P/BV
EV/EBITDA
OCF/EV (%)
FCF/EV (%)
FCFE/MCAP (%)
Dividend Yield (%)
Source: Company, HSIE Research
Page | 5
Alkyl Amines: Company Update
1 Yr Price Movement
Alkyl Amines
2500
2400
2300
2200
2100
2000
1900
1800
1700
1600
Feb-25
Jan-25
Dec-24
Nov-24
Oct-24
Sep-24
Aug-24
Jul-24
Jun-24
May-24
Apr-24
Mar-24
Feb-24
1500
Rating Criteria
BUY:
>+15% return potential
ADD:
+5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL:
> 10% Downside return potential
Page | 6
Alkyl Amines: Company Update
Disclosure:
We, Nilesh Ghuge, MMS, Harshad Katkar, MBA, Prasad Vadnere, MSc & Dhawal Doshi, CA authors and the names
subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views
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Any holding in stock – No
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Page | 7
Alkyl Amines: Company Update
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HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp.
Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066
Compliance Officer: Murli V Karkera Email: complianceofficer@hdfcsec.com Phone: (022) 3045 3600
For grievance redressal contact Customer Care Team Email: customercare@hdfcsec.com Phone: (022) 3901 9400
HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg.
No. POP: 11092018; IRDA Corporate Agent License No.: CA0062; SEBI Research Analyst Reg. No.: INH000002475; SEBI
Investment Adviser Reg. No.: INA000011538; CIN - U67120MH2000PLC152193
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Mutual Funds Investments are subject to market risk. Please read the offer and scheme related documents carefully before
investing.
Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee
performance of the intermediary or provide any assurance of returns to investors.
HDFC Securities
Institutional Equities
Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,
Senapati Bapat Marg, Lower Parel, Mumbai - 400 013
Board: +91-22-6171-7330 www.hdfcsec.com
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