KRChoksey bullish on this multibagger stock post Q3 results; sees 80% upside

Shares of Balaji Amines Limited have doubled investors' money in the last 12 months but the brokerage house KRChoksey is still bullish on the company and believes that the stock has an upside potential of 80 per cent.   In the past one year, the share price jumped from Rs 1,465.45 to Rs 3,225, logging around 120 per cent return in this period.   An amount of Rs 5 lakh invested in this multibagger stock a year ago would have turned into Rs 11 lakh today. Long-term investors have made big gains by investing in this stock as it has surged over 7,700 per cent in the last ten years.   The stock ended 0.16 per cent higher at Rs 3,127.95 against the previous close of Rs 3,123. Market cap of the firm rose to Rs 10,134.87 crore on BSE.   Recently, the company reported 19.45 per cent rise in consolidated net profit at Rs 89.56 crore for the quarter ended December 2021. Profit in the year-ago period stood at Rs 74.9 crore.   Net sales rose to Rs 564.9 crore in the same quarter from Rs 392 crore in the year-ago period. The earning per share (EPS) has increased to Rs 27.64 in December 2021 from Rs 23.14 in December 2020.   On the performance, Mr. D. Ram Reddy, Managing Director, commented, "The prices of acetic acid continue to remain elevated which has eroded the margins of Acetonitrile. However, over the medium to long term we foresee a substantial demand for this product as the ‘China Plus One’ strategy takes center stage and the PLI incentives provided by the government of India gives further impetus leading to substantial capex by pharmaceutical and agrochemical companies."   According to brokerage house KRChoksey, the robust performance was mainly driven by higher realisations from the amines and specialty chemical segment, followed by growth in the hotel division.   "We expect substantial pick-up for its products in the coming quarters on the back of debottlenecking and PLI incentives provided by the government of India leading to substantial capex by pharmaceutical and agrochemical companies. We believe ramp-up of DMF and Acetonitrile facility with the commencement of DMC unit shall help its operating margins to inch upwards and support the profitability," it added.   "The company is trading at a P/E valuation of 28.83x/22.88x/17.57x FY22E/23E/24E earnings. We maintain ‘BUY’ recommendation as we remain optimistic about the company’s growth prospects and apply P/E multiple of 28.4x to its FY24E earnings, which yields a target price of Rs 5,674 per share," the brokerage house said.   Balaji Amines Limited is a manufacturer of Aliphatic Amines in India. Broadly, the company is specialized in manufacturing Methyl Amines, Ethyl Amines, Derivatives of Specialty Chemicals and Natural Product and its business is broadly classified into three segments - Amines, Specialty Chemicals and Derivatives.