Balaji Amines (BLA)expected good performance is premised on robust demand from pharma and agrochemical industry that comprise 77% of its revenue mix, ramp-up in BSCL's production, doubling of methylamines by FY24 and production linked incentive scheme that provides the right tailwinds for long-term volume growth.

4Q EBITDA/APAT were 20/13% above our estimates, owing to 6% rise in revenue, lower-than-anticipated raw material costs, and lower-than- expected depreciation. These were offset by higher-than-expected tax outgo.

Volumes, realisations and margins: Total sales volume was 24.88kt (+12/- 12% YoY/QoQ). Along with the healthy volumes, per-unit gross margin also improved by 58/28% YoY/QoQ to INR 78/kg. The tabulated per-kg realisation from the Amines segment comes to INR 148 (+42/16% YoY/QoQ). Back calculated per-kg EBITDA improved by 82/29% YoY/QoQ to INR 44. Gross margin stood at 53.1%, +497/509bps YoY/QoQ. EBITDA margin jumped by 664/286bps YoY/QoQ to 29.4% (HSIE 25.9%) on the back of better price realisations across most of the products and increase in operating leverage due to surge in volume offtake.

Con call takeaways: (1) The Board has recommended a final equity dividend of INR 4/sh for FY21. (2) The new plant of Ethylamines at Solapur, which has installed capacity of 50 tons per day, has commenced operations from May'21. Now, BLA has the largest installed capacity of Ethylamines in India at 22.5ktpa. (3) The de-bottlenecking of the Acetonitrile plant has been delayed on account of lack of skilled manpower due to pandemic-led restrictions. In 4Q, capacity utilisation of the DMF plant was at about 48%. (4) BSCL witnessed substantial ramp-up in capacity utilisation due to increase in demand for EDA. BLA is currently manufacturing 1,300-1,500 tons per month.