Reviews

In this edition, we have reviewed Balaji Amines Ltd.and E.I.D. – Parry (India) Ltd.. We suggest our reader-investors to HOLD Balaji Amines Ltd.and E.I.D. – Parry (India) Ltd. 

We had recommended Balaji Amines Ltd. in Volume 37, Issue No. 23 dated October 10 – October 22, 2022, under the ‘Cover Story’ segment. The recommended price for the stock was ₹3,237. We had recommended the stock on the basis of improved demand, pricing and diversification. Balaji Amines (BAL), established in 1988, manufactures methylamines, ethylamines, derivatives of specialty chemicals and natural products. Established to meet the growing demand for value-based specialty chemicals, BAL also produces derivatives for various pharmaceutical and pesticide industries. 
 

The company has a global presence in countries like the UK, USA, Latin America, Canada, Israel, Pakistan, Bangladesh, Oman, Germany, Italy, Egypt, South Africa, Korea, Taiwan, Spain and Poland. In Q1FY24, Balaji Amines’ consolidated revenue decreased by 1.64 per cent QoQ at ₹463.67 crore compared to ₹471.40 crore from the previous quarter same year. On a YoY basis, revenue decreased by 30.81 per cent. PBIDT, excluding other income, increased by 5.28 per cent to ₹98.04 crore YoY as compared to ₹93.13 crore from the previous quarter same year, while YoY decreased by 54.36 per cent. 

The company’s net profit stood at ₹67.68 crore compared to ₹148.04 crore, a YoY decrease of 54.28 per cent, while sequentially it increased by 22.58 per cent. The net profit margin decreased by 749 bps YoY and increased by 235 bps QoQ, standing at 14.60 per cent. At TTM, Balaji Amines is trading at a PE of 28.5 times, which is the same as its The company’s net profit stood at ₹67.68 crore compared to ₹148.04 crore, a YoY decrease of 54.28 per cent, while sequentially it increased by 22.58 per cent. The net profit margin decreased by 749 bps YoY and increased by 235 bps QoQ, standing at 14.60 per cent. At TTM, Balaji Amines is trading at a PE of 28.5 times, which is the same as its three-year median PE. The company has maintained a healthy three-year average ROE and ROCE of 28.6 per cent and 40 per cent, respectively. It has three-year compounded sales and profit growth of 36 per cent and 49 per cent, respectively. The company has a debt-to-equity of 0.04 times with an interest coverage ratio of 48.2 times. 
 

It is focusing on expanding its product portfolio and catering to evolving customer needs. BAL is in talks with battery manufacturers for lithium-ion battery supply and is diversifying its product portfolio. The company’s Q1FY24 financial performance showed a decrease in revenue and EBITDA compared to the previous year. However, the company remains optimistic about its long-term prospects and is dedicated to maintaining a customer-centric approach. It aims to achieve ₹4,000 crore in revenue in the coming years and expects improved demand and pricing in the pharmaceutical and agrochemical markets. Hence, we recommend HOLD. 

We had recommended E.I.D. – Parry (India) Ltd. in Volume 37, Issue No. 23 dated October 10– October 22, 2022, under the ‘Choice Scrip’ segment. The recommended price for the stock was ₹605.30. We had recommended the stock on the basis of the distribution network, expansion into new markets and a high return on capital employed. E.I.D. – Parry (India) Limited is a listed company in the sugar and nutraceutical industries, headquartered in Chennai. Founded in 1788, the company has pioneered new paths in its businesses. 
 

The company is also a world leader in organic spirulina and microalgal products in the nutraceuticals space, with specialised manufacturing plants in Oonaiyur and Saveripuram. It also has a significant presence in the farm inputs’ business through its subsidiary, Coromandel International Limited. In Q1FY24, E.I.D. – Parry (India)’ consolidated revenue increased by 2.42 per cent QoQ at ₹7,026.45 crore compared to ₹6,860.31 crore from the previous quarter same quarter. On a YoY basis, the revenue stood flat. PBIDT, excluding other income, increased by 3.76 per cent to ₹667.72 crore QoQ as compared to ₹643.51 crore from the previous quarter same year, while YoY it decreased by 3.34 per cent. 
 

The company’s net profit stood at ₹328.99 crore compared to ₹493.54 crore, a YoY decrease of 33.34 per cent, while sequentially it increased by 4.44 per cent. The net profit margin increased by 9 bps QoQ and decreased by 223 bps YoY, standing at 4.68 per cent. At TTM, E.I.D. – Parry (India) is trading at a PE of 12.1 times, which is slightly higher than its three-year median PE. The company has maintained a healthy three-year average ROE and ROCE of 15.8 per cent and 25 per cent, respectively. It has a three-year compounded sales and profit growth of 27 per cent and 26 per cent, respectively. It is in the process of evaluating partnerships and enhancing its capabilities for the refinery business and plans to expand into the FMCG sector and conduct a pilot program in Chennai. The government has targeted 14 per cent ethanol blending by November 2023. The Q1FY24 revenue was ₹698 crore, with a loss after tax of ₹46 crore. The company is exploring partnerships to improve profitability and focuses on sourcing from Brazil and container mode sales. The nutraceutical business registered lower turnover and losses due to certification issues in Europe. The global sugar market is at a surplus of 377,000 MT due to increased production from Brazil. Hence, we recommend HOLD.