Alkyl Amines Vs Balaji Amines: The Chemical Industry is important for the economic development of our country providing products and enabling technical solutions in virtually all sectors of the economy. Let’s compare two aliphatic amines companies in this article and understand and analyze their business.
About Amines and their uses
Aliphatic amines are formed when an aliphatic molecule replaces one or more hydrogen atoms from ammonia. This is generally done by the reaction of alcohol and ammonia, but can also be synthesized using other organic molecules like aldehydes.
They are generally distinguished by their unpleasant, fishy odor. Amines play a vital role as nitrogenous compounds in biological systems and form the building blocks in pharmaceutical, agrochemical, veterinary, and nutritional industries.
Amines are used as solvents, catalysts, intermediates, and building blocks for a variety of industries. In healthcare, amines are necessary in the production of APIs (Active Pharmaceutical Ingredient). Similarly, amines are important in the production of agrochemicals. Many personal care and detergents are based on amine moieties.
These perform a wide range of roles in industrial applications such as gas treatment, resins, coatings, water treatment, and others, ranging from regulating pH to absorbing carbon dioxide to controlling polymerization reactions. The characteristics & applications of amines allow for a number of industrial uses and new product development.
Alkyl Amines Vs Balaji Amines
Company Overview
Alkyl Amines Chemicals Ltd
Established in 1979, Alkyl Amines Chemicals Ltd. (AACL), headquartered in Mumbai, India is an international supplier of aliphatic amines, specialty amines, and amine derivatives to customers in the pharmaceutical, agrochemical, water treatment, rubber chemical, and a variety of industries.
They have a product portfolio of 100+ products which they cater to 20+ countries across the globe through their 20 individual production plants over three manufacturing sites covering over 110 acres of land.
Balaji Amines Limited (BAL)
Balaji Amines Limited (BAL), headquartered in Solapur, Maharashtra was set up in the year 1988 to manufacture Methyl Amines. BAL was the first in India to test an indigenously developed technology and develop it further.
Today, their product portfolio includes 30+ products including Methylamines, Ethylamines, Derivatives of Specialty Chemicals, and Pharma Excipients. They also have facilities to manufacture derivatives, which are downstream products for various Pharma /Pesticide industries.
They cater to 830+ customers across 51 nations like the USA, UK, Argentina, Latin America, Canada, Israel, Australia, Bangladesh, Germany, Italy, Egypt, and South Africa, through their 5 manufacturing plants with an installed capacity of 2,31,000 MTPA.
As of 31st March 2023, they were the only manufacturer in India for the following products that are import substitutes- Morpholine, Dimethylformamide (DMF), N-Ethyl-2-Pyrrolidone (NEP), N-Methyl-Pyrrolidone (NMP), Pharmapure Povidone (PVP K30 & PVP K25), 2-Pyrrolidone (2-P), & Gamma-Butyrolactone (GBL).
Industry Overview
The Indian economy continued to remain strong in the face of adverse global macroeconomic challenges in FY23. According to the data by MoSPI (Ministry of Statistics and Programme Implementation), India’s GDP grew by about 7.2% in FY23. For FY24, the overall growth scenario is expected to remain robust, although significant challenges persist in the global environment.
The Indian amine market is relatively smaller than its Chinese counterpart. However, due to supply constraints from China, Indian pharma companies are choosing domestic producers to fill the gap. The Indian Aliphatic Amines market is expected to grow at a steady CAGR of 3.7% by 2030.
The Indian specialty chemicals industry represents 22% of India‘s overall chemicals and petrochemicals market and is valued at US$32 billion. This segment accounts for more than 50% of chemical exports.
From a global perspective, China is the leader but India has the opportunity and potential to emerge as an alternative hub for specialty chemical manufacturing and is expected to grow at ~12% CAGR to US$120 billion, which will presumably double its share in the global market from 3-4% to 6% in the next 2-3 years to come.
Alkyl Amines Vs Balaji Amines – Financials
Revenue & Net Profit
Alkyl Amines reported revenue of Rs.1682.34 cr in FY23 against Rs.1541.99 cr in FY22 indicating an increase of 9.1%. Its profitability has increased to Rs.228.65 cr in FY23 from Rs.224.89 cr, indicating an increase of 1.7%. They have 25% of the total revenue contributed from exports.
Balaji Amines reported revenue of Rs.2355.4 cr in FY23 against Rs.2322.88 cr in FY22 indicating an increase of 1.4%. Its profitability has decreased to Rs.405.68 cr in FY23 from Rs.417.9 cr, indicating a decrease of 2.9%. The contribution of exports to total revenue was 15.12%. The fall in profits was primarily on account of de-growth in the pharma and API sectors.
On a 4-year CAGR basis conveys that Balaji Amines has grown at a higher growth rate compared to Alkyl Amines.
The figures below compare the revenue & profits of Alkyl Amines Vs Balaji Amines over the last five fiscals.
| Financial Year/ Particulars | Revenue from operations (In Cr.) | PAT (In Cr.) | ||||
|---|---|---|---|---|---|---|
| Alkyl Amines | Balaji Amines | Alkyl Amines | Balaji Amines | |||
| 2023 | 1682.34 | 2355.4 | 228.65 | 405.68 | ||
| 2022 | 1541.99 | 2322.88 | 224.89 | 417.9 | ||
| 2021 | 1242.44 | 1311.46 | 295.34 | 243.5 | ||
| 2020 | 992.88 | 935.77 | 215.28 | 97.47 | ||
| 2019 | 846.4 | 943.05 | 83.74 | 117.09 | ||
| 4-Year CAGR | 18.74% | 25.71% | 28.50% | 36.49% | ||
Profit Margins
Operating Margins of Alkyl and Balaji stand around 20.40% and 25.86% respectively, with Balaji taking the lead. However, the 5-year average for both companies is approximately equal.
Net Profit Margins of Alkyl and Balaji stand around 13.59% and 17.22% respectively, with Balaji being ahead again. However, looking at the 5-year average, we find Alkyl slightly ahead of Balaji.
The OPM as well as NPM for both companies have been reduced in FY22 and further reduced in FY23. This is mainly due to a reduction in margins due to a rise in input costs and de-growth in the pharma and API sectors.
The figures below compare the profit margins of Alkyl Amines Vs Balaji Amines over the last five fiscals.
| Financial Year/ Particulars | Operating Profit Margin | Net Profit Margin | ||||
|---|---|---|---|---|---|---|
| Alkyl Amines | Balaji Amines | Alkyl Amines | Balaji Amines | |||
| 2023 | 20.40% | 25.86% | 13.59% | 17.22% | ||
| 2022 | 21.09% | 26.81% | 14.59% | 17.99% | ||
| 2021 | 34.54% | 28.06% | 23.77% | 18.57% | ||
| 2020 | 25.89% | 18.97% | 21.68% | 10.42% | ||
| 2019 | 19.42% | 20.31% | 9.89% | 12.42% | ||
| 5-year Average | 24.27% | 24.00% | 16.70% | 15.32% | ||
Return Ratios
Alkyl reported a Return on Equity of 21.25%, significantly lower than its 5-year average of 32.88%. Balaji reported an RoE of 28.94%, slightly higher than its 5-year average of 27.53%.
Considering, Return on Capital Employed, Alkyl & Balaji reported 27.52% and 39.08% respectively. Alkyl returns are again lower than its 5-year average of 38.35% while Balaji managed to beat its 5-year average of 33.58%.
The variation in margins is mainly due to a decrease in the profit margins due to an increase in the prices of various input materials of both the company.
The figures below compare the return on equity & return on capital employed of Alkyl Amines Vs Balaji Amines over the last five fiscals.
| Financial Year/ Particulars | Return on Equity | Return on Capital Employed | ||||
|---|---|---|---|---|---|---|
| Alkyl Amines | Balaji Amines | Alkyl Amines | Balaji Amines | |||
| 2023 | 21.25% | 28.94% | 27.52% | 39.08% | ||
| 2022 | 25.32% | 38.98% | 32.98% | 50.21% | ||
| 2021 | 44.60% | 31.38% | 55.69% | 35.58% | ||
| 2020 | 47.91% | 15.83% | 46.84% | 17.94% | ||
| 2019 | 25.33% | 22.51% | 28.74% | 25.09% | ||
| 5-year Average | 32.88% | 27.53% | 38.35% | 33.58% | ||
Debt Analysis
The debt-to-equity ratio of both companies during the last 5 years indicates a positive signal. Both companies have relied very little on borrowed capital. The 5-year average debt to equity of Alkyl & Balaji stands at 0.15 & 0.21 which means they can retain more of their revenue as they do not have a huge obligation towards the repayment of debt and the interest towards it.
When it comes to interest coverage ratio Alkyl leads with an ICR of 93.9x, while Balaji’s figure comes up to 48.35x. ICR of above 1.5x is an acceptable ratio, according to which both Companies are considered very safe.
The figures below compare the debt-equity and ICR of Alkyl Amines Vs Balaji Amines over the last five fiscals.
| Financial Year/ Particulars | Debt to Equity | Interest Coverage Ratio | ||||
|---|---|---|---|---|---|---|
| Alkyl Amines | Balaji Amines | Alkyl Amines | Balaji Amines | |||
| 2023 | 0.07 | 0.04 | 93.9 | 48.35 | ||
| 2022 | 0.02 | 0.08 | 93.06 | 34.82 | ||
| 2021 | 0.06 | 0.14 | 64.31 | 18.85 | ||
| 2020 | 0.16 | 0.39 | 26.33 | 6.69 | ||
| 2019 | 0.45 | 0.4 | 9.82 | 13.67 | ||
| 5-year Average | 0.15 | 0.21 | 57.48 | 24.48 | ||
Key Metrics of Alkyl Amines Vs Balaji Amines
| Particulars | Alkyl Amines | Balaji Amines |
|---|---|---|
| CMP | 2,280.25 | 2,288.1 |
| Market Cap(Cr) | 11,945 | 7,808.32 |
| EPS | 33.52 | 60.93 |
| Stock P/E | 63.62 | 33.42 |
| P/B | 9.12 | 4.1 |
| Promoter Holdings | 71.96% | 53.07% |
| FII Holdings | 2.92% | 4.52% |
| Dividend Yield | 0.46% | 0.51% |
Future Plans
Alkyl Amines–
- To continue sustainable growth by increasing market share & by introducing new products.
- To expand their capacity for aliphatic amines at the Kurkumbh & Patalganga sites with an investment of approximately 400 crores.
- To focus on the processes to enhance the process efficiency & reduce waste.
- To increase renewable energy share by 300% more than existing solar energy generation by March 2026.
- To focus on process development for specialty products which are import substitutes.
Balaji Amines-
- To focus on continuous enhancement of processes to optimize the utilization of raw materials & energy.
- A capex plan of Rs 400-500 Cr in the next 2-3 years.
- The construction of the N Butylamines and Methyl amines plant has started, which is anticipated to be commissioned during the second half of FY24.
- Commissioning of Phase 1 of the 90-acre Greenfield Project (Unit IV) comprising the 15,000-tonne Dimethyl Carbonate (DMC)/Propylene Carbonate (PC) plant and the 15,000-tonne Propylene Glycol (PG) plant.
Conclusion
As we conclude the article Alkyl Amines Vs Balaji Amines, we notice that both companies have been performing well in the past years and have plans to expand in the future and continuously work on it. Though this industry is facing global competition from China, it is expected that there will be further growth in the chemical industry.
Proper due diligence is required to understand the risk & return characteristics and suitability of the stock before investing. Would like to hear your thoughts on these stocks in the comment section below.
Written By Ashish Agarwal
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