- Management is thinking about long-term growth. Planning to acquire a large piece of land.
- Volume guidance for the next 5 years: 10-15%
- Acetonitrile capacity will come online in H2-2022.
- Long runway for growth for Alkyl Amines as Pharma is on a different Wicket.
Revenue growth: 26%
- Value growth contribution: 2/3
- Volume growth contribution: 1/3
In H1 the volume de-grew but picked up well in H2.
Pharma in India is doing very well. And Alkyl is a beneficiary of it.
- Revenue: up 62% yoy
- EBITDA: up 95% yoy
- PBT: up 106% you
- Over the years the demand for Amines has increased a lot.
- The end-user market is growing very fast, and that is why Alkyl is able to utilize its capacities.
- Very optimistic in terms of volume. 10-15% volume growth is what the management expects in the next 3-5 years.
- H2 of 2022 will see a spurt due to Acetonitrile capacity coming online.
- The Indian Pharma Market is still growing. Penetration of Pharma drug is very low in India. So Alkyl will be a beneficiary of Pharma boom.
- Some plants have reached the limit of De-bottlenecking.
- The De-bottlenecking limit will soon reach in the other plants as well.
End users application
- Pharma: 55-60%
- Agrochemical: 10-15%
- Auto: foundry, rubber
- Lab chemical
- Water treatment
- Some customers have been for the last 40 years.
- Top 10 customers have been with the company since the last 10 years
- Repeat customers: 99%
- Monthly deal and some customers want quarterly deals
- Some export customers want annual contacts
- 2nd wave hit more severely
- In April and May, more workers got infected
- But the plants were not affected in terms of production
- Non-infected People are working overtime.
- 80-90% of the ppl who were impacted are back on the Job.
- The new plant will add 30% capacity to the Aliphatic amines portfolio.
- Location: Kurkumbh
- Capex amount: 300-350 Cr
- Product: Ethylamine
- 5 plants
- Completion: Q3 FY-23
- Date of commencement: H2 FY-22
- Location: Dahej
- Expansion got delayed by a quarter. Reason: COVID 2nd wave
- Capacity: 15000+ tons
- Investment: 150-160 Cr
- Also a big export market is available.
Operating at full utilization across many plants. That’s y they are putting New capacities.
It takes 18-24 months to set up a new capacity and 2-3 years to fully utilize the same.
Alkyl wants to put capacities as they would like to be global leaders in the industry.
Post expansion, they will keep de-bottlenecking.
- 2021: 140-150Cr
- 2022: 200 Cr
- India Demand: 32-35k tons
- Alkyl Amines is servicing 40% of the Indian market. Not able to serve fully coz of capacity constraints.
- Competition is serving a small proportion of the market.
- Import volumes: 50-60% of India’s requirement is imported
- Application: Mainly pharma, then agrochemical and then some lab chemicals
- Management doesn’t see a reason why the price will not sustain
- Acetic acid prices have gone up a lot and that has impacted the Acetonitrile margins.
- Capacity: 150 tpd
- Majorly consumed in-house.
- DHAHCL was expanded b4 Methylamine capacity. And next year they will put another plant of DMAHCL.
- No concrete plans to put up DMF capacity. (Balaji is the leader in this)
- RM price have increased in last quarter.
- Crude and petrochemical prices went up.
- A large # of Rm saw a major hike, couldn’t pass on everything to the customer. Thus, took a margin hit on a QoQ basis.
- Specialty products were selling at higher prices, that is why the margins have increased.
- Blended margins will not go to the previous range but sustainability in the current range is not guaranteed.
- Volume growth of 10-15% over the last 10 years. Confident that will grow at the same rate in the next 10 years.
Looking for new land
- Acquisition date: 2023
- Size: 50-100 acres
Some elbow room in to debottleneck in Kurkumbh and Dahej
- 3 bn
- Methylamine and Isopropanolamine are transported in a gaseous state and thus are very hazardous to transport
- Other amines are transported in liquid form and are easier to transport in comparison to those amines which are transported in Gaseous state.
- China’s own requirement has incased in the last couple of years. Which has helped Alkyl.
- Due to the small size of the industry, it becomes unattractive for bigger players to enter.
Aman Thadani has cleared all three levels of the CFA(US) Program. He is in Equity Research since 2017 with a key focus on deep fundamentals and valuations. He has worked at Consortium Securities (PMS division) and MoneyLife Advisory. He believes in maintaining Health and Fitness as the key requisite to aim for healthy and fit returns. He enjoys playing Chess and Football.