KRChoksey Brokerage recently released stock research reports on AMI Organics, focusing on share price targets, along with Result Update Q4FY24, featuring buy, hold, and sell recommendations and potential upside. Let’s delve deeper into their recommendations for AMI Organics Share Price Target.
AMI Organics Share Price
AMI Organics has exceeded revenue expectations with a growth of 2.3% due to strong performance in both Advanced Intermediates and Specialty Chemicals segments. This significant achievement highlights the company’s potential for future growth. The EBITDA also surpassed estimates by an impressive 32.5% because of reduced operating expenses.
For Q4FY24, AMI Organics reported a revenue increase of 20.7% year-over-year (YoY) and 35.2% quarter-over-quarter (QoQ), totaling INR 2,250 million.
This growth was driven by a significant volume increase in advanced intermediates, which saw an 18.2% YoY growth and a 47.4% QoQ growth, contributing INR 1,896 million (84% of total revenue for the quarter). The Specialty Chemicals segment also showed robust growth, increasing by 35.8% YoY, although it saw a slight decline of 6.6% QoQ, contributing INR 353 million.
Export and Domestic Revenue Growth
Export revenue grew by 14.6% YoY, making up 56% of total revenue, while domestic revenue surged by 29.6% YoY, contributing 44% to the total revenue. This balanced growth in both export and domestic markets underscores AMI Organics’ strong market position.
Future Growth Prospects
AMI Organics has ambitious plans for the future. The company expects to see modest growth in the first half of FY25E and higher growth in the second half as new projects become commercialized. The company has guided for a revenue growth of 25% for FY25E, with the revenue mix likely to shift towards the second half of the year.
The company’s future growth will be driven by the commercialization of CDMO contracts, increased production of electrolyte additives, and improved utilization rates. The CDMO projects are expected to ramp up from the second half of FY25E, focusing on the New Chemical Entity (NCE) market, innovative market, and lifecycle management market.
Financial Stability and Investments
AMI Organics has shown financial stability with total long-term borrowings standing at INR 1,114 million and cash equivalents at INR 530 million by the end of FY24. The company spent INR 2,800 million on capital expenditure (capex) in FY24, primarily on the Ankaleshwar Unit 2 and maintenance. For FY25E, AMI Organics has planned a capex of INR 3,100 million, with investments in Ankaleshwar Unit 2, electrolyte additive infrastructure, a captive solar power plant, and maintenance.
Revenue and Profitability Outlook
Despite some pressure on margins due to an unfavorable product mix, the EBITDA grew by 5.9% YoY and 62.8% QoQ, reaching INR 432 million. The EBITDA margin, however, contracted by 269 basis points (bps) YoY but improved by 326 bps QoQ, standing at 19.2%. The company expects the EBITDA margin to return to historical levels of around 20% with better utilization rates.
The adjusted net profit declined by 8.6% YoY but increased by 48.1% QoQ to INR 251 million. The adjusted profit after tax (PAT) margin contracted by 354 bps YoY but improved by 97 bps QoQ, reaching 11%.
Market Conditions and Strategic Growth
The market conditions are gradually improving, with raw material prices stabilizing. This stability is expected to support gross profitability in the second half of FY25E. The company has been strategically expanding in the advanced pharmaceutical intermediates segment, securing large CDMO contracts. Additionally, AMI Organics started commercial production of electrolyte additives and expects strong order fulfillment in FY25E and FY26E.
The company received three process patents during Q4FY24, two of which are niche and complex, providing cost, efficiency, and environmental benefits.
AMI Organics Share Price Target
Currently, AMI Organics’ stock is trading at a price-to-earnings (PE) ratio of 43.1x for FY25E and 33.0x for FY26E. Given the strong growth prospects, the target price has been increased to INR 1,294 per share, up from the previous INR 1,200. The stock rating remains “ACCUMULATE,” with an expected PE ratio of 35.0x for FY26E.
| Date | 16th May 2024 |
| CMP (Rs) | Rs.1,219 |
| Target Price | Rs.1,294 |
| Potential Upside | 6.2% |
| Recommendation | ACCUMULATE |
| Market Cap (INR Mn) | INR 44,644 |
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