Could This Small Cap Stock Jump 50%? Yes, Feels This Broking Firm

Analysts at Anand Rathi are bullish on the stock of Ami Organics Limited and see a potential upside of nearly 50% on the stock. The shares were extremely volatile in trade today, following the quarterly numbers of the company.

Ami Organics: Potential upside of nearly 50% on the stock

Current market price	Target price on the stock	% gains (Anand Rathi estimates)
Rs 855	Rs 1282	49.95%

Ami Organics Limited reported a growth of 54.5% in its consolidated revenues at Rs 1,435 million in Q4-FY22 as against Rs 929 million in Q4-FY21. The performance wan driven by growth in the Pharma Intermediate business coupled with the expansion of the Specialty chemicals business due to the acquisition of facilities from Gujarat Organics.

According to Anand Rathi on the profitability front, the company's consolidated operating margins (Ex. Other Income) stood 18%% at Rs 258 million in Q4-FY22 as against 25% at Rs 232 million in Q4-FY21. "The decline in operating performance was mainly attributable to increased cost on back of supply chain shock and integration expenses of newly acquired company. The consolidated PAT margins for the company during the quarter stood 15% at Rs 215 million as against 16.7% Rs 155 million in Q4-FY21," Anand Rathi has said in its report.

First Indian company outside China to develop Electrolyte

According to Anand Rathi, during the quarter the company has announced foray into electrolyte product for cells used in energy storage devices (batteries) and has become the first Indian and global company outside China to successfully develop the electrolyte. Company's sample products are already sent to customers across the world and expects the commercialization of the product by end of this financial year. The current market size of this product is about $1 billion and is expected to double in next three years.

Buy the stock with a price target of Rs 1282

Going ahead the company plans to incur capes of about Rs 1,900 million in its intermediates business which is expected to get complete end of financial year 2024. On the electrolyte products, the company has already acquired land for the project. "With the presence in high growing and niche markets Ami Organics Limited is set to continue to post better growth in mid to long term. We have incorporated current financials and updated our numbers for the company. We continue to remain positive on the stock and maintain our BUY rating on the stock with a revised target Price of Rs 1,282 per share," the firm has said in its report.