Balaji Amines shares hit record high on robust quarterly results

The company’s consolidated net profit more than doubled to ₹974 m from ₹315.8 m in the same period last year.

Its consolidated total income during the quarter grew 102% year on year (YoY) to ₹4.5 bn against ₹2.2 bn in the June 2020 quarter led by robust demand for the company’s products from end-user industries.

Due to the increase in revenue, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 164% YoY while EBITDA margins improved to 31.9% from 24.3% in the year-ago quarter.

Outlook robust on strong capex pipeline

The management said the improvement in revenue was on account of an additional income stream with the commencement of its 16,500-ton ethylamine plant and improved capacity utilisation.

The company’s ethylamine plant achieved capacity utilisation of over 90% during the quarter and a lower cost of production due to new technology adopted by the company.

Along with the pre-existing capacity of 6,000 tons of ethylamine, the company has the largest installed capacity of ethylamine in India at 22,500 tons per annum.

The construction of its dimethyl carbonate (DMC) plant is going as per the scheduled timeline and it expects the DMC plant to commence operations by the end of the financial year 2022.

The company has decided to undertake a capex of approximately ₹700-800 m for an additional acetonitrile plant, which will have a capacity of 50 TPD (tonnes per day) at its 90-acre greenfield project (Unit IV).

The plant is likely to get commissioned during the financial year 2023.

The proposed capex is expected to drive further revenue growth for the company.

Subsidiary witnesses robust demand from non-agrochemical clients

Balaji Amines’ subsidiary, Balaji Specialty Chemicals continued to witness robust demand for its products during the June 2021 quarter.

Non-agrochemical clients constituted about 40% of total sales of ethylenediamine (EDA) during the quarter from about 10% in earlier quarters.

The subsidiary recorded 1,500 tons of average production. The crunch in the supply of raw materials which it was facing earlier has now eased.

The company anticipates further ramp-up in production to about 1,800 tons per month once the supply of raw material eases further.

Commenting on the results, Dr Ram Reddy, managing director of Balaji Amines said,

"We shall continue to witness improved demand across our product portfolio as the dependability on the Indian pharma and agrochemicals industry increases on account of the ‘China Plus One’ business strategy being adopted by western companies.

Our thrust remains to expand our portfolio of key derivative products alongside entering newer speciality chemicals to gain from both vertical integration and operating efficiencies."

It aims to increase the share of exports from its subsidiary plant to about 25-30% going forward.

How the markets reacted to Balaji Amines June quarter results today…

Shares of the company opened higher at ₹3,482 on the BSE yesterday, and ₹3,500 on the NSE.

The scrip then rose as much as 9% to touch its all-time high after the company declared its results for the June 2021 quarter.

Over the last 30 days, the share price of Balaji Amines has risen by 21.6%. In the last year, the share price has moved up by over 450% against a 45% rise in the S&P BSE Sensex.

The share touched its 52-week high of ₹3,977 and a 52-week low of ₹567.4 on 3 August 2021 and 3 August 2020.

About Balaji Amines

Balaji Amines is one of the largest manufacturers of aliphatic amines in India. It specialises in manufacturing methylamines, ethylamines, derivatives of specialty chemicals and pharma excipients.

The company has a diversified product portfolio with a basket of over 25 different products. Its products are categorised under three main categories i.e. amines, amine derivatives and specialty & other chemicals.

The company is among the two major manufacturers of aliphatic amines with a market share of 50%.

The amines category accounts for 20-30% of its revenues which are low margins products while the amines derivatives category accounts for 30-40% of its revenues which are high margin products.

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This article is syndicated from Equitymaster.com