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Motilal Oswal Report
Alkyl Amines Chemicals Ltd. reported an in line revenue. The downward trend in gross margin reversed in Q1 FY23, the first time in six quarters, expanding to 50.9%. However, it is still lower from the peak margin of 60.9% in Q3 FY21. Higher gross margin also resulted in a beat of 40% on our Ebitda estimate.
Ebitda margin expanded to 24.5% in Q1 FY23. Capacity expansion in Methyl and Ethyl Amines and capacity utilisation ramp up of the recently expanded acetonitrile plant should drive better margin in FY23-24 for Alkyl Amines from 21.2% in FY22.
The management had already guided at a capex of Rs 3 billion for FY23, with a new plant being set up for Ethyl Amines (capacity of 35 ktpa), which should be commissioned in H2 FY23. It expects to add additional capacity two-to-three years down the line.
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