1 month ago
CD Equisearch is bullish on Balaji Amines recommended buy rating on the stock with a target price of Rs 2653 in its research report dated March 20, 2024.
Broker Research
March 20, 2024 / 02:39 PM IST
Buy
CD Equisearch's research report on Balaji Amines
On the back of destocking of inventory by Chinese companies and end user industry facing headwinds along with lower realization in key products, Balaji Amines revenue fell 34.6% from Rs 585.95 crs in Q3FY23 to Rs 383.36 crs in Q3FY24. These headwinds also impacted the saleable volumes which saw a drop of 4.4% to 26,903 mt in Q3FY24 as against 28,147 mt in Q3FY23. Volumes could however revive in the next few quarters as pharma & API industry appears to have turned a corner. • OPMs during the quarter drop by over 245 bps to 19.35% in Q3FY24 from 21.8% in Q3FY23. Operating profit fell by 41.9% to Rs 74.20 crs in Q3FY24 as against Rs 127.78 crs in Q4FY23. Though on the back of improving raw material prices OPM on sequential basis improved by 522 bps to 19.35% as against 14.13% in Q2FY24 thus indicating improvement in industry.
Outlook
Earnings are estimated to rise by over 50% (though on small base) next fiscal. Weighing odds, we retain our ‘buy” rating on the stock with target price of Rs 2653 (previous target Rs. 3364) based on 30x FY25e EPS of Rs 88.42 over a period of 9-12 months.
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