Buy This Company Stock For 38% Return In 1 Year: CD Equisearch Suggests

Brokerage firm Emkay Global suggests investors buying the stock of Balaji Amines (chemical specialty) for a 38.52% return. The company's growth in revenue was on account of a better product mix and volume boost from the recently commissioned 16,500 tons ethylamines plant.

Target Price

The Current Market Price (CMP) of Balaji Amines is Rs. 2827. CD Equisearch has estimated a Target Price for the stock at Rs. 3916. The stock is expected to offer a 38.52% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 2827
Target Price	Rs. 3916
1 year return	38.52%

Company performance

Despite overall consolidated sales volume witnessing a decline of 13.8% to 27,589 mt in Q3FY22, Balaji Amines' revenue from operations grew by a pleasing 44.1% to Rs. 564.90 crore as against Rs. 392.13 crore in the corresponding period in the prior year. Due to the lag effect in passing on higher raw material prices and rising logistics costs, Balaji's standalone operating profit growth of 10.6% y-o-y was not apace the top-line growth of 29%. The subsidiary, Balaji Speciality, delivered a stellar Q3FY22 clocking in revenues of Rs. 130 crore compared to Rs.57.12 crore in the previous year on the back of robust demand and higher price realization.

Comments by CD Equisearch

About the potential of the stock CD Equisearch said, "The company did report barely indistinct drop in standalone operating margins - 22.6% in Q3 vs 26.5% in Q3FY21 (vs. 22.5% in Q2FY22). Margin suppression was primarily on account of higher methanol and ammonia prices. Factoring in the sustainability of higher margins, we have upped our FY23 EPS estimates by some 25%. A favorable pricing environment could boost overall revenues by 69.0% this fiscal and by 34.4% crore in FY23e. The volatile inflationary environment has put little brakes on BAL's CAPEX program as the setting up of the new DMC plant under Phase 1 of its 90-acre greenfield project is nearing completion and is expected to commence production by April."

About the company

Balaji Amines Ltd. is a certified company, specialised in manufacturing Methylamines, Ethylamines, Derivatives of Specialty Chemicals and Pharma Excipients. The company's state-of-the-art manufacturing facility is located at Tamalwadi Village, near Solapur (Maharashtra State, India) The facility is fully equipped with the latest technology like digital computerized controlled systems, which facilitates the control of operations from the control room, in addition, BAL possesses an excellent R&D facility and laboratory, which helps in conducting basic research and also to fine-tune the process.

(Also read:  Buy This Technology Stock For 23% Return In 1 Year: Emkay Global Suggests)

Disclaimer

The above stock was picked from the brokerage report of CD Equisearch. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.