Ami Organics - Pharma Intermediates & Specialty Chemicals

[saurabhgupta]

Q3 FY24-

The company revised its revenue growth guidance for FY24 from 18-20% to 15-18% due to eroding topline, expecting to be in the same space for the upcoming year.
Revenue growth for FY25 is expected to be between 17% to 22%, with potential for further increase, driven by anticipated volume pickup in Fermion and contribution from new electrolyte projects.

Margins for Specialty Chemicals moderated to 14-16% due to price erosion and industry pressure, with the aim to improve margins to 18-20% in the next quarter and a long-term target of 23%.

The price of raw material and final product has decreased by 20%, impacting the market size and application geography.

The new facility’s revenue is estimated to be approximately 3 times that of the Ankleshwar Unit.

Baba Fine Chemicals, acquired for the semiconductor industry, currently contributes around Rs. 40-45 crores to the topline and has potential for incremental growth.

The company has already supplied validation quantity of a UV absorber product and plans to ramp up production from Q1 FY25.

The current capacity utilization of the Specialty Chemical plant is expected to increase from 45% to 55% and reach full utilization by FY26

The company expects the EBITDA margin to be between 23% and 26% in 3-4 years.

The company plans to focus solely on the electrolyte additive business and not diversify into other areas. Sales from electrolyte for Fermion have commenced, but it is still premature for the electrolyte CDM business. The Rs. 300 crores CAPEX for electrolyte will take some time, whereas the Ankleshwar facility’s upgradation is ongoing and will be finished soon. The company targets achieving Rs. 1,000 crore revenue by FY2025-26 midway.
Capex outlay for 9MFY24 was Rs. 212 crores, funded through a mix of internal accruals and debt, with a total capex outlay for Ankleshwar unit revised from Rs. 190 crores to Rs. 310 crores.

The current capacity is 500 tons each for VC and FVC products, with plans to install an additional 2,000 tons each.

A Rs. 300 crore toll manufacturing opportunity is expected to be finalized in FY25, with the plant taking approximately 12 months to come up.

[hnk_so]

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[vikasbargale]

A short video covering both Ami Organics and Fineotex Chemicals

Super Investors are buying this stock

Just sharing.

[Harsh_87]

Electrolyte business will definately flourish this year
Fermion COntract also adds up to revenue in Q1 onwards

[suyash_uttam]

A Small Cap Stock in Super Investor Portfolios 😎

[nikporw]

Ami Organics – the intermediates juggernaut? – Uncommon Opportunities (home.blog)

[Devanshi02]

Ami organics Q4 export

Export value rs 272 crore up by 134.7% YoY and 52.1% QoQ
Export volume up by 20.1% yoy and 3.9 QoQ%

Data from source, not validated.

[jeet1990]

Could you please link the source for this?

[Chandan_Sarkar1]

Raising QIP…not exceeding ₹ 5,000 million

Raising QIP.pdf (900.8 KB)

[pankajgarg]

The company has not even completed IPO base.

And now they are diluting 500cr QIP on the market cap of 4500 cr!!

[Navin_choudhary]

Ami Organics Limited, has been accredited with Gold Medal by EcoVadis. The EcoVadis Gold Medal is the Sustainability scorecard which put the Company amongst top 5% of the companies assessed by EcoVadis globally.
Company has been rated by EcoVadis across the four themes of Environment, Labour & Human Rights, Ethics and Sustainable Procurement.

[rikin]

Hi, they have now a basket for all the intermediates. In my view there are 5 (2 are bases conjoined to form one important intermediate)

[rikin]

I think what really happened in Q2:
a) We saw a global correction in base chemicals and KSM’s - Ami had to eventually sell at a price where competition killed pricing due to having access to cheaper RM whereas Ami had stored RM’s for 3 months in advance (high cost RM)
b) Contribution of one of their key anti-coagulants is almost negligible to zero in FY24 (Apixaban)

Some updates on Apixaban
-Apixaban’s patent was rendered invalid by UK Court (they mentioned- gave entry to Teva and Sandoz who are the generic filers (Ami’s clients).

The expectation was that rest of Europe would follow. However, in July 2023 the Apixaban patent was upheld in Netherlands and France, to an extent where generic versions of Apixaban were removed.

-However, the Irish government has sided with the decision of the UK government and render the patent invalid.

-Apixaban’s global patent expiry is at the end of CY26 meaning generic filers get access to the product in 2027.

-Though Apixaban’s contribution in FY24 was negligible to zero - it could make a comeback for Ami in FY25 (as UK and Ireland volume may be re-stocked)

[rikin]

You have to adjust this data to account for some billing differences

[jeet1990]

Key takeaways from Q4FY24 Concall from screener:

Financials:

• Total capex for FY '25 expected to be around INR 250 crores.
• Stand-alone tax rate at 25.16%.
• Partnership firm tax rate at 35% for Baba Fine Chemicals.
• Mix of exceptional items affecting the overall tax rate.
• INR 70 crores is the remaining capex for Unit 2 Ankleshwar.
• INR 100 crores capex related to electrolyte additive and related infrastructure.
• INR 50 crores capex towards the captive solar power plant.
• Additional maintenance capex of around INR 30-40 crores for the year.

Revenue and Growth:

• Targeting a revenue growth of 25% for FY '25.
• Achieved all-time high revenue from operations of INR 225 crores in Q4 FY '24.
• Volume growth has been consistent every quarter.
• Adjusted PAT for FY '24 was INR 80.8 crores with adjusted PAT margins of 11.3%.

Business Segments:

• Advanced Pharmaceutical Intermediates business grew by 18% year-on-year and 47% quarter-on-quarter in Q4 FY '24.
• Specialty business grew by 36% during the quarter.
• Commercial operations for battery chemical business started during the quarter.
• Working on developing various levers for the specialty chemical business.

Future Growth and Innovation:

• Strong focus on innovation in manufacturing complex intermediates using cost-effective technologies.
• Received grants for 3 process patents during the quarter to safeguard intellectual property.
• Company aims to have incremental CDMO segment in their portfolio going forward.
• Mix of early-stage and late-stage molecules in CDMO business.

Challenges and Opportunities:

• Faced price pressure in the past year, impacting margins.
• Stabilization of raw material prices expected to improve margins.
• Strong visibility in terms of firm orders and commitments, supporting revenue growth targets.
• Focus on cost-effectiveness and competitiveness to sustain in the generic API market.

Expansion and Utilization:

• Unit 1 operating at 72% capacity.
• Unit 2 inaugurated and commercialized one production block, expecting other blocks to ramp up in the next 3 years.
• Unit 3 dedicated to specialty chemical business, excluding pharma intermediates.
• Expected breakeven at around 30-35% utilization for specific blocks.

Disc: invested

[Harsh_87]

Ami has crossed its Resistance level from IPO price, looks like dust settled and ready for new highs as Q1 results going to be superb

[Krishna_Kumar]

• Revenue grew 15% year-on-year to Rs. 176.7 crores in Q1 FY25
• Advanced Pharmaceutical Intermediates segment grew 16.6% to Rs. 135 crores
• Specialty Chemicals segment grew 10% to Rs. 42 crores
• Gross margin improved to 42.1% from 40% in Q4 FY24
• EBITDA margin declined to 16.7% from 22.1% in Q1 FY24
• Establishing Enchem AMI Organics as a subsidiary for electrolyte manufacturing
• Expanding electrolyte additives capacity to 2,000 metric tonnes
• Developing 8 new electrolyte additives beyond VC and FEC
• Expanding into Japan market after successful PMDA inspection
• Promoting new molecules from Baba Fine Chemicals to Korean and Japanese customers
• Ankleshwar plant expansion on track - remaining 2 blocks to be completed by Q2 FY25
• 16 MW solar power plant project initiated, expected completion by Q2 FY25
• Electrolyte additives capacity expansion on track for completion by end of FY25
• Targeting 25% revenue growth for FY25
• Aiming to reach 20%+ EBITDA margins by Q3/Q4 FY25
• Expecting asset turnover of 3-4x for Ankleshwar plant at full utilization
• Confident of meeting 25% growth guidance for FY25
• Expecting sequential growth in coming quarters
• Fermion contract to fully ramp up in FY26
• Peak sales for Apixaban and Rivaroxaban expected in FY26
• 15% YoY revenue growth despite industry challenges, driven by pharma segment
• Margins under pressure but expected to improve with higher utilization and better product mix
• New growth drivers like electrolytes, Japan expansion, and CDMO contracts in pipeline

[Chandragupta]

So the acquisition of Baba Fine Chem seems to have gone haywire. Looks like they had only one (major) customer Heraeus who is facing challenges in its final product. Baba had revenue of Rs.47 crore in FY23 and Ami paid 4X EBIDTA (Rs.68 crores) for a 55 % stake. Last year, the management said Baba will grow 3 to 4 X in a year. But now it is making just Rs.5 crores per quarter in revenues. Quite a coincidence that Heraeus started facing challenges just when Ami took over one of their suppliers.

Ami is now trying to develop other products and tap other customers, but until they get anything concrete, this acquisition will have to be deeply discounted. The good thing – hopefully - is that at least the technology they got access to is still useful and relevant.

[Gautam_Chopra]

[rikin_shah]

Good observation.

Haraeus is facing challenges though they appear to be more near term. If one understands the photoresist chemical industry - and map out the key players (Honshu Chemicals, Mitsui, Sumitomo and Haraeus), they could see the way things are shaping up in the industry.

-Baba should be viewed as just a mechanism to enter this space, it will take 24 months to penetrate further clients.

-Once a client has been penetrated - most contracts signed don’t even have an expiration clause.

-The product line up of each player is exciting and Baba does have the chemistry ability to serve those clients