Balaji Amines gallops after good Q3 results

Balaji Amines jumped 6.49% to Rs 3584.65 after the company's consolidated net profit rose 19.46% to Rs 89.56 crore on 44.06% increase in revenue from operations to Rs 564.90 crore in Q3 December 2021 over Q3 December 2020.

The revenue growth was muted sequentially as compared to previous quarter due to sluggish demand for few products as few of the company's clients could not procure Key Starting Materials (KSMs) for some of the company's matching products. At the same time, the company had to shut down the plants of DMF & Acetonitrile for a brief period to carry out the de-bottlenecking exercise, which were completed in the month of November 2021.

On a consolidated basis, profit before tax rose 38.48% to Rs 144.52 crore in Q3 December 2021 over Q3 December 2020.

EBITDA rose 35.45% year-on-year to Rs 159.67 crore in Q3 FY22. EBITDA margin stood at 28.22% in Q3 FY22, higher than 25.39% in Q2 FY22 and lower than 30.02% in Q3 FY21. The YoY fall in operating margin was primarily due to lower operating leverage on account of dip in volume offtake.

Total expenses jumped 46.14% to Rs 421.30 crore with cost of materials consumed soaring 82.53% to Rs 296.10 crore during the period under review. Sales volume fell 13.77% YoY to 27,589 MT in Q3FY22.

D. Ram Reddy, managing director, commented, "The demand remained sluggish due to the unavailability of KSMs for same of our matching products at our customers' end in Q3FY22. However, this constraint is now over, and we are witnessing a substantial pick-up in these products. Our sales volumes were also affected on account of temporary shutdowns we had to undertake at our DMF and Acetonitrile plants for the de-bottlenecking exercise, which was completed in November 2021.

As announced earlier, our capex for DMC plant under Phase 1 of our 90-acre Greenfield Project (Unit IV) is nearing completion and we hope to commence operations during Q1FY23. The capacity of this plant would be about 10,000 to 12,000 tons per annum. The company would be the sole manufacturer of this product in India and currently the annual domestic demand stands at about 8,000 to 9,000 tons which is completely met by imports. We are confident to achieve capacity utilization of 60-70% at our DMC plant in our first year of operation itself. DMC is used in the production of Polycarbonate and Lithium Batteries - the consumption of which will exponentially grow in India backed by various government incentives. Also, we see encouraging scope for exporting DMC to outside markets.

Secondly, the prices of DMF continue to remain healthy and with the completion of the debottlenecking exercise, the capacity utilization of this plant has increased substantially, the full impact of which is likely to be visible in Q4FY22 and next financial year. We expect the capacity utilization of DMF plant to increase from about 34% in 9MFY22 to 70-80% in coming quarters.

We shall continue to witness improved demand across our product portfolio as the dependability on Indian pharma and agrochemicals industry increases on account of 'China Plus One' business strategy being adopted by western companies. Our thrust remains to expand our portfolio of key derivative products alongside entering newer specialty chemicals to gain from both vertical integration and operating efficiencies."

Balaji Amines is a leading manufacturer of aliphatic amines & speciality chemicals in India, specialized in manufacturing of methyl amines, ethyl amines, derivatives of amines and other specialty chemicals.

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