Motilal Oswal's research report on Alkyl Amines
Acetonitrile demand is expected to stay strong, led by a recovery in demand from the Pharma sector. ACN is used as a solvent in the Pharma industry to produce antibiotics and insulin, apart from usage in the Textile and Plastic industry. n Much of the acetonitrile produced globally is as a by-product of acrylonitrile. This makes the production of ACN dependent on the demand of acrylonitrile in the market. Only China and India produce ACN through the ammonolysis of acetic acid. n AACL is the largest ACN player in India with a capacity of ~30ktpa. At present, the capacity of its closest competitor is one-third that of AACL. Its competitor is expanding capacity, with a new upgraded technology with cost advantages.
Outlook
We expect RoE to improve to 29% for FY24 from 25% in FY22. The stock is trading at 37x FY24E EPS and 26x EV/EBITDA. We reiterate our Neutral rating on the stock, and value it at 40x FY24E EPS to arrive at our TP of INR3,025.
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