Sell Alkyl Amines Chemicals, target price Rs 2400: HDFC Securities

HDFC Securities has sell call on Alkyl Amines Chemicals with a target price of Rs 2400. The current market price of Alkyl Amines Chemicals is Rs 3151.45.
Time period given by analyst is one year when Alkyl Amines Chemicals Ltd. price can reach defined target.

Alkyl Amines Chemicals Ltd., incorporated in the year 1979, is a Small Cap company (having a market cap of Rs 16288.37 Crore) operating in Chemicals sector.

Alkyl Amines Chemicals Ltd. key Products/Revenue Segments include Amine Derivatives, Speciality Chemicals, Processing Charges, Export Incentives, Scrap, Other Operating Revenue, Gases Industrial for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-06-2022, the company reported a Standalone Total Income of Rs 477.68 Crore, up 11.33 % from last quarter Total Income of Rs 429.06 Crore and up 21.23 % from last year same quarter Total Income of Rs 394.04 Crore. Company reported net profit after tax of Rs 81.88 Crore in latest quarter.

Investment Rationale
The brokerage maintains SELL on Alkyl Amines with a price target of INR 2,400 (WACC 11%, terminal growth 5%). The stock is currently trading at ~47x FY24E EPS. It believes that the current valuation already factors in positives from potential volume growth, post doubling of the acetonitrile plant capacity and ~40% additional capacities of the aliphatic amines plant. The volatile raw material prices can continue to put pressure on the margin in the near term. EBITDA/APAT were 62/68% above estimates, owing to a 17% rise in sales, lower-than-expected raw material cost, and lower-than-anticipated tax outgo.

Promoter/FII Holdings
Promoters held 72.0 per cent stake in the company as of 30-Jun-2022, while FIIs owned 2.28 per cent, DIIs 1.26 per cent.