Hi,
In the recent RPTs disclosure above, the company paid an interest of ~37 lacs to KMPs. Anyone following the business, could share what is this for? Did the co. take a loan from KMPs? What was the interest rate on such loan and the reason for the loan? Why did they take it from KMPs?
Thanks in advance.
Disc.: Not invested.
If we assume that the interest paid for the entire year would be 74 Lakhs. Then interest rate on the loans given by the directors comes out 5%.
Otherwise, corporate governance track record of the co has been good, which is indiacted by conservative accouting and morever the fact that when industry growth was flat. They distributed substanial amounts of dividend to the shareholders.
Disclosure-Invested
@shyamutty Trying to find whether promoter bought it in his personal holding or it has shifted into some other hands. As Diamines is into production of Ethylene amines wouldnât it become a competitor for Alkyl now? Please share your thoughts.
As I understand Promoter and Chairman Mr Yogesh Kothari has exited fully and erstwhile Vice Chairman Mr Amit Mehta is now the chairman/promoter and majority shareholder. At the moment the exact current product chemistries are different but, not sure about future.
They have a non compete clause with diamine & chemicals so donât think there will be any direct competition with erswhile parent. Diamine has been doing well and clocked a gross margin of 72% in the dec19 quarter which is quite high. Amongst all amine players diamine is almost debt free in contrast with other amine players but scale of operations is limited as of now.
The company seems to manufacture Benzalkonium Chloride (popularly known as ADBAC) going by their products page.
This looks to be the primary compound in non-alcoholic hand sanitizers sold by several brands and is an approved product in several countries as a sanitizer for all surfaces.
Any inputs on capacity, contribution, demand etc. would be helpful.
The stock has gained a lot in the last one year, however, I think it has a huge tailwind as two of itâs biggest customer are Pharma and Agrochemicals - Both of which have both a good show in this year.
Moreover, with the tensions rising between the India-China, we would be importing less of Chemicals from the China.
Whatâs the opinion of the other
Check the Acetonitrile realizations. Acetonitrile actually works as a counter auto cyclical thing. Prices are close to 270Rs per Kg from 120-130 Rs per kg just a year ago. Be a little cautious, more capacities for Acetonitrile are being commissioned by Balaji Amines, they have made the capacity fungible (other chems can also be produced, as Acetonitrile prices are very volatile). Recently, IOL Chemicals has also announced plans to manufacture Acetonitrile. A classic Capital cycle can play out, where more players get attracted by high prices and subsequent increase in supply side leads to prices falling by the cliff
Stupendous Q4 results driven by lower raw material costs (link). Recent price run up is fully justified. trading at 20x PE.
disclosure: tracking
Alkyl Amines Q4FY20 Results
Weâll be dividing this into Business updates, Balance sheet updates, Cash Flow updates and my take
Business Updates
-Topline remained flat from 239 crores to 237 crores (YOY). Volume growth would be higher (waiting for concall)
-The cost of material consumed fell YOY from 135 crores to 115 crores due to softening input prices.
-Employee cost increases YOY from 12.6 crores to 16.95 crores.
-Gross margins expanded from 40.7% to 54.8% YOY, mainly on expansion in prices of Acetonitrile and softer input prices. (Last year Rm expenses spiked)
-EBITDA margins expanded from 16.7% to 29.62% YOY.
-OPMs expanded from 17% to 26.5% YOY
-PBT increased YOY from 31.56 crores to 61.10 crores. PAT came in higher at 49.2 crores vs 18.92 crores YOY.
Balance Sheet Update (FY19vsFY20)
-Property, plant, and equipment increased from 375 crores to 392 crores YOY.
-Capital work in progress is at 44.88 crores.
-Long term borrowings reduced from 77.75 crores to 47.52 crores and current borrowings fell from 35.08 crores to nearly 0.
-Trade payables fell from 124 crores to 71 crores
-Receivable Days improved from 66 days to 60 days
Cash Flow Updates (FY19vsFY20)
-Net cash generated from operating activities increased from 144 crores to 187 crores YOY.
-CFO/Ebitda remained healthy at 70%.
-Fixed assets purchased came in at 77.2 crores vs 69 crores YOY
-Cash&cash equivalents increased from 19.33 crores to 31 crores.
My take- Solid yearly performance and good numbers with healthy margin expansion. Let me present two variant perceptions: margins expanded due to an increase in acetonitrile realizations. But, as more capacity for the product comes in place (Balaji amines and recent plans by IOL chemicals), I am expecting capital cycle to play out in Acetonitrile coupled with further capacity expansions planned by Alkyl Amines. Margins will contract going forward. The second variant perception is that going forward in the next 2-3 years, Free cash flow growth is going to accelerate as capex intensity reduces. We have seen how stocks get re-rated once Free cash flow growth comes in.
No recommendations, just a contemplation. I am biased and have ownership in the stock. I am not a SEBI registered research analyst, please take my opinions with a bucket full of salt.
Would be great if you could post numbers in terms of capex upcoming, current capacity utilisation, realization of a few products, whether margins are sustainable or not. These numbers tied up with narrative really help instead of blanket statements. Sorry just my opinion and it adds value to the thread
Alkyl Amines concall
(Attended it, there can be a mistake or two)
Business Updates
New capex for Methylamines Capacity (15K) delayed and now will commence by Q2FY21. As equipment didnât arrive on time due to the ongoing pandemic.
New capacity of Acetonitrile (15K) also delayed and will commence by the end of FY21.
Capex likely to be at 170 crores for these projects and some small projects we are looking at.
Acetonitrile is a very volatile chemical (pricing). Abs requirement is not taking off, expecting prices to remain at these levels for the next 6-9 months.
Took us 3 years of R&D to develop this product as purity requirements are very high.
Current capacity of Acetonitrile is 40 tonnes per day in Kurukumbh, increasing the capacity by 50% (adding 20tonnes per day) at Dahej. Rationale end clients (pharma) want two locally sourced sources for Acetonitrile.
Utilisation levels approx for all the 12 plants have been at 80-85%. Peak for some plants.
Raw material (ethanol, ammonia etc) prices were subdued. We source Ethanol from abroad as in foreign countries ethanol is made using corn. Whereas, in India it is made using sugarcane and prices of ethanol are high due to it being used as a blend in petroleum.
End user break up:
Pharma: 50%
Agro:15-20%
Various other applications apart from these.
Power cost has come down in last 10-15 years from 15% to 10% as our volumes have grown.
Sales break up:
50% Amines
25% Derivatives
25% Speciality chemicals
Geographical break up
15-20% is exports
80% is for domestic markets
Acetonitrile produced via Acetic Acid and Ammonia is a greener product and purer than the one produced via Acrylonitrile. Certain applications like in Pharma only require a purer product.
New capacity for Methylamines of 15K, at 80rs per kg can contribute 120-150 crores to the topline.
H2FY20 volume growth was flat, saw 17% value growth in FY20.
Management
On track for 2000 crore sales target for next 3-4 years.
Capex required for this target would be close to 300 crores apart from the one we are already incurring for the current projects.
Took us soo many years to get to this level. Not easy to compete in this industry as industry is also very small.
First two projects we did with American Technology and subsequently we set up an R&D centre and have done the projects on our own.
Risk
Proposed Ban on pesticides. Impact to be very low and if it happens, impact likely to be in low single digits.
India:China issue can break the supply chain. As majority of the intermediates etc are imported from China by the Pharma industry. Will affect us if it happens.
Pricing of Acetonitrile depends all upon the demand and supply. Pricing depends upon Japan, Eu, and USA. Moreover, additional capacities are coming in by Balaji Amines(which can take up the capacity till 18k)
New domestic capacities will affect the pricing of Acetonitrile.
My view
Company seems on a strong footing with further Expansions planned and revival in end user industries like Pharma. The only spanner and a very important source of risk is the inflated margins. My guess is as good as the managements guess. No one knows when the prices of Acetonitrile will correct. In my opinion, they will. Reversion to mean is something which all analysts forget when the going is good. No recommendations, I am biased.
A little conflicting statementâs by the brokerage, when the management was asked the second time around about Acetonitrile and the domestic capacities. They did clearly mention that upcoming domestic capacities will have some impact on the pricing. Maybe different ways of portraying information 
Nice explanation
Can such thing happen in vinati organics or navin fluorine too ?
Excellent results in Q1 considering Covid impact. Better than other chemical companies which have seen revenues drop by 20-25% (compared to <10% degrowth for Alkyl). Solid EPS as well - assuming this is due to low raw material costs. Donât know how long this will last.
Someone, Please share Alkyl Amines AGM Notes
Can anyone give comparison of Alkyl, Balaji n Diamines stocks
