Alkyl Amines Q3 Results Review - Performance Hurt By Price-Led Decline; Volume Guidance Intact: Motilal Oswal

Motilal Oswal Report

Alkyl Amines Chemicals Ltd. reported marginally lower-than-estimated revenue in Q3 FY23. Decline in prices of some products hit its Q3 performance. Though gross margin was steady at 49%, Ebitda came in below our estimate at Rs 697 million with Ebitdam at 17.9% (down 190 basis points QoQ).

Demand from the pharmaceuticals sector for two of its products (Ethyl Amines and DMAPA) has been hit by inventory buildup and supply chain constraints.

That being said, the long-term guidance of 10-15% volume growth remains intact as the management focuses on volume growth.

Capacity expansion of Ethyl Amines in Kurkumbh (100 tpd capacity) is on track and it is likely to be commissioned by May/Jun-23, with mechanical completion being planned in Apr-23. Capex envisaged for the same is Rs 4 billion.

Alkyl Amines had previously announced that it would be manufacturing four to five new products in the specialty segment, which would be developed in its own research and development labs. The company dispatched the first tanker of one of the products in Feb-23 with the other products to be commissioned by Sep-24E.

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