India’s chemical industry is on the fast track due to environmental concerns in China and a Government crackdown there on chemical manufacturers. Amine producers in India are one of the beneficiaries. Amine refers to an organic compound derived from ammonia by replacing one or more hydrogen atoms with organic groups. The primary amines include amino acids, biogenic amines, trimethylamine, and aniline. Ammonia inorganic derivatives are also termed amines, for example, monochloramine. Amines are used in manufacturing medicines and drugs apart from being used in making azo-dyes and nylon. They are used mainly in developing chemicals for water purification, medication, and crop protection. Personal care products also consume amines. Ethanol amines are the most common type of amine used in the global market. We have shortlisted three companies with a potential for further upward movement.
1. Indo Amines Ltd (BO:INAM)
Indo Amines is one of the country’s largest manufacturers of Fine, Specialty, and Performance chemicals. The company also makes perfumery chemicals and Active Pharmaceutical Ingredients. The end-users of Indo Amines’ products include Agrochemical, Fertilizer, Pesticides, Petrochemicals, Dyes and Intermediates, and Road Construction companies. At present, it has ten manufacturing facilities with four new sites under construction. Department of Scientific and Industrial Research (or DSIR) has approved the company’s R&D lab. Indo Amines achieved a revenue CAGR of 16.6% for the last five years against an industry average of 6.7%. The overall market share of the company grew from 2.8% to 4.5% in FY2021. For the last five years, its net income CAGR remained at 32.8% against the industry average of 18.8%. Its return on equity is 25.3% in FY2021 compared with the industry average of 21.7%.
A quick look at this small-cap company’s financials reveals that Indo Amine’s consolidated revenue in Q4FY2021 jumped 29.8% year-on-year to Rs 158.8 crore from Rs 122.3 crore. Profit after tax skyrocketed a mind-blowing 841.2% to Rs 16.0 crore from Rs 1.7 crore during the same period. The stock delivered nearly 600% in a year, 307.7% in six months, 111% in a month, and 21.8% in five days.
2. Balaji Amines Ltd (NS:BAMN)
Established in 1988, Balaji Amines manufactures Methylamines, Ethylamines, Derivatives of Specialty Chemicals, and Pharma Excipients. In May 2021, the company’s new plant of Ethylamines with an installed capacity of 16,500 tons per annum commenced operations. Balaji Amines has the largest installed capacity of Ethylamines in India at 22,500 tons per annum with this plant. Capacity utilization of its Dimethylformamide plant improved to 48% on a year-on-year basis. The company’s expansion plan includes production ramp-up of Acetonitrile to 18-20 tons per day (or TPA) from 9 TPA. Its plans to install a capacity of 9,900 TPA of Di-methyl are underway. Pharmaceutical application and agrochemicals verticals are expected to drive robust demand for Methylamines and related value-added products. Balaji is a market leader in India, with an installed capacity of 48,000 TPA. Apart from this, Balaji plans to set up a separate plant for Methylamines with a 40,000 to 50,000 TPA capacity under Phase-2 expansion of the Greenfield Project. In Dimethyl Formamide (or DMF), BAL has a leadership position in India with an installed capacity of 30,000 TPA and plans to double its DMF capacity under Phase-2 expansion of the Greenfield Project. Vertical and horizontal integration has aided Balaji Amines to maintain a dominant position in a majority of its products through the dual advantage of cost competitiveness and product switching flexibility.
On a standalone basis, BAL’s Q4FY2021 revenue jumped 58.1% to Rs 376.7 crore from Rs 238.3 crore year-on-year. For fiscal 2021, the growth was 33.4%. EBITDA more than doubled in Q4FY2021 to Rs 114.2 crore and rose 78.2% annually. Operating profit jumped 124% to Rs 108.7 crore in Q4FY2021 compared to Q4FY2020 and 90.1% on an annual basis. PAT skyrocketed 144.9% to Rs 79.2 crore in the March 2021 quarter and more than doubled to Rs 231.7 crore in FY2021 over FY2020. The scrip zoomed fivefold in a year, returned 196.8% in six months, 25.6% in a month, and 17.2% in the last five days. FII and DII have marginally increased their holding in BAL in June 2021 quarter.