BSE ID : 530999 NSE ID : BALAMINES
RECOMMENDED PRICE 600.75
PEAK FROM RECO 5220.00 768.91%
CURRENT PRICE 3082.45 413.10%
Balaji Amines Ltd (BAL) has been consistently adding capacities and fine tuning process to provide quality products at lowest cost to the customers. Hence, we recommend ``Buy`` on the stock with price target of Rs 780(appreciation of almost 30%) for long term investment.
During Q2FY18, co has posted strong growth in its topline as well as bottomline. On YoY basis, co has shown decent jump of almost 17% in its topline at Rs 202 Cr in Q2FY18 from Rs 172 Cr in Q2FY17 while operating profit of company has witnessed rise of almost 30% at Rs 52 Cr in Q2FY18 from Rs 40 Cr in Q2FY17. However, bottomline of company has recorded the surge of 34% from Rs 22 Cr in Q2FY17 to Rs 29 Cr in Q2FY18. Also co has seen consistent growth in its financials since FY15. On PAT front, co has grown at more than 40% from Rs 58 Cr in FY16 to Rs 82 Cr in FY17. Along with it, co has posted consistent growth in Return on Shareholder’s fund from FY15 of 15% to 23 % in FY17. On margin front, co has posted whopping margin of 22% at operating level in FY17 from 19% in Fy16 while it has posted decent net profit margin of 12% in the same year as compare to 8.96% in FY16. On debt front, by end of this year, co is expected to be left with Rs 10 Cr to Rs 15 Cr of the total long-term loan which will be paid entirely in the next financial year. Hence co is expected to be debt free (on total long term debt) in next one to two year time horizon.
Balaji Amines Ltd (BAL) has been consistently adding capacities and fine tuning process to provide quality products at lowest cost to the customers. World over, Amine technology is a closely guarded process with only a few handful companies having access to such technology. BAL for the first time in India tested on an indigenously developed technology and developed it further over a period of time. Today, BAL‘s products are accepted in international markets and have gained the distinct export quality status, which makes it one of the few companies in India having the potential to match the stringent international quality standards.
China, the leader in specialty chemical business is consistently losing its market share in global space due to stricter environmental norms which in turn is favourable for Indian Specialty chemical companies as India is the third largest producer of Chemicals and Petrochemicals in Asia and the eighth largest in the world. BAL being one of the leading manufacturers of Aliphatic Amines in India with plan to invest Rs 66 crore in Balaji Speciality Chemicals in coming future is well positioned to cater the opportunity provided in the sector.
The company is currently trading at 21.76x of TTM eps of Rs 27.60 while it is trading at 17x of FY18E eps of Rs 34.37 & 15x of FY19E eps of Rs 39.99. On the back of higher capacity utilization, reducing finance cost, benefit to Indian speciality chemical companies on account of china’s stricter environmental norms & BAL’s move towards acquiring stake in Balaji speciality chemical will lead to strong growth in company going forward. Hence, we recommend “Buy” on the stock with price target of Rs 780(appreciation of almost 30%) for long term investment.
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