Alkyl Amines: Conference call updates

Key highlights

  1. Management is thinking about long-term growth. Planning to acquire a large piece of land.
  2. Volume guidance for the next 5 years: 10-15%
  3. Acetonitrile capacity will come online in H2-2022.
  4. Long runway for growth for Alkyl Amines as Pharma is on a different Wicket.

 

 

Performance

Annual

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.

 

Quarter

  • Revenue: up 62% yoy
  • EBITDA: up 95% yoy
  • PBT: up 106% you

Business update

  • 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
  • Dyestuff
  • Lab chemical
  • Water treatment

 

Customers

  • 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%
  • Contracts:
  • Monthly deal and some customers want quarterly deals
  • Some export customers want annual contacts

 

2nd Wave

  • 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.

 

Expansion

  1. Amines

  • 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

 

  1. Acetonitrile

  • 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.

 

Capex

  • 2021: 140-150Cr
  • 2022: 200 Cr

 

Acetonitrile

  • 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.

 

Methylamine

  • Capacity: 150 tpd
  • Majorly consumed in-house.

 

 

DMAHCL

  • DHAHCL was expanded b4 Methylamine capacity. And next year they will put another plant of DMAHCL.

 

 

DMF

  • No concrete plans to put up DMF capacity. (Balaji is the leader in this)

 

RM

  • 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.

 

Margin

  • 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.

 

 

Guidance

  • Volume growth of 10-15% over the last 10 years. Confident that will grow at the same rate in the next 10 years.

 

LT growth

Looking for new land

  • Acquisition date: 2023
  • Size: 50-100 acres

Some elbow room in to debottleneck in Kurkumbh and Dahej

 

 

Cash

  • 3 bn

 

General

  • 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.

 

Competition

  • 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.

 

 

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