Hem Securities has given Buy recommendation for Ami Organics with a target price of Rs. 1100 in its research report issued on Jun 02, 2022
Hem Securities report on Ami Organics
Like most chemical companies, Ami Organics’s margins contracted in Q4, while this will be a headwind for the near term. Sequentially, sales improvement was lower than expected, reflecting the impact of logistic challenges, such as unavailability of containers and lack of timely supply of imported raw materials. Company commercialized 17 new products during FY22 During the quarter, Company had successfully developed an electrolyte for cells used in energy storage devices. Samples of which are under approval with customers from pilot production. It also commercialized 2 products using continuous flow reactors. In addition, they have also successfully developed 3 more existing products which are under pilot scale now. The company has already ordered equipment and the products will commercialize using continuous flow reactors in the FY23. The company announced a Capex plan of INR 190cr to build a Brownfield plant in Ankleshwar, Gujarat, to support the future business growth in the company’s advanced pharmaceutical intermediates segment.
Currently, the stock is trading at a premium multiple of 28x FY24E, compared to the sector. This however is justified, given the higherthan-industry/molecule growth, which is largely contributed by new products.