This Chemical Stock Can Rally 37% After Jumping 861% In 3-Years: Edelweiss Suggests Buy

Leading brokerage firm Edelweiss sees a strong potential of 37% surge in the shares of Balaji Amines Ltd. The analyst has recommended investors to buy Balaji Amines with a target price of Rs 4,250 apiece. Balaji Amines Ltd. (BAL) posted robust growth on YoY basis, however performance on sequential basis was muted.

Top line came slightly below expectations, primarily due to underperformance by the standalone business, while gross profit margin was under pressure despite stable raw material prices impacting profitability. Check key takeaways below:

1. Stock To Buy: Balaji Amines Stock Performance

The last trading price of Balaji Amines is Rs 3093 apiece. Its 52-week high is quoted at Rs 3936 apiece and 52-week low is quoted at Rs 2680 apiece, respectively.

2. Stock To Buy: Balaji Amines 5-Years Return

The stock has given a return 507% in 5-years, 861% in 3-years, and negative 8% in 1-year.

3. Stock To Buy: Balaji Amines Subsidiary Continues To Outperform

In Q2FY23, subisidiary Balaji Specialty Chemicals Ltd. (BSC) posted robust performance, with top line coming in at INR178cr, up +89% YoY / +13% QoQ. This growth was driven by strong realisation during the quarter at INR340/kg, up +71% YoY / +6% QoQ, while volume stood at 5,245 MT, up +10% YoY / +6% QoQ. Strong realisation, along with volume uptick, indicates a healthy demand environment for its products.

4. Stock To Buy: Strong Capex Pipeline To Drive Long-Term Growth

Under Phase 2 of the greenfield project, BAL annouced a strong pipeline of capex for setting up the following capacities: (i) n-Butylamine capacity (15,000 MTPA), (ii) Acetonitrile plant (15,000 MTPA) based on new technology, which will aid in absorbing acetic acid price volatiity, (iii) separate DMF plant with 30,000 MTPA additional capacity to cater to growing demand from the Pharma and API industries and (iv) 40,000 MTPA capacity addition of Methylamines to satisfy rising demand from the Agrochemical and Pharma industries.

5. Stock To Buy: Valuation

According to Edelweiss, "We expect BAL earnings to register robust 22% CAGR over FY23-25e owing to a strong pipeline of capacity additions under Phase II greenfield expansion plans and ramp-up of capacities added under Phase I. We maintain our 'BUY' rating with a revised TP of INR4,250."

6. About Balaji Amines

It has gained specialisation in manufacturing Methylamines, Ethylamines, Derivatives of Specialty Chemicals and Pharma Excipients. These have been the main products, It also has facilities for the manufacturing of derivatives, which are down-stream products for various Pharma /Pesticide industries apart from user specific requirements.

Disclaimer

The stock has been picked from the brokerage report of Edelweiss. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.