Alkyl Amines Chemicals Limited

Alkyl Amines experienced a subdued first half of FY26, with volumes marginally up but topline remaining flat due to subdued prices. The company successfully managed its margins to retain profitability. This performance was primarily attributed to demand pressures and the multi-faceted impact of US government actions, including affected direct exports, reduced customer demand, and increased aggressive competition from Chinese players in the domestic market.

The impact of subdued demand was more pronounced on methylamines compared to ethylamines, which are largely domestically focused. While ethylamine prices have gone down, leading to an impact on contribution per kg, overall contribution and gross margins remained stable. The methylamine market faces an overhang in capacity, with a total market size of 80,000-90,000 tons for four players against a capacity exceeding 1,50,000 tons, exacerbated by Aarti Drugs commissioning a new plant.

The company is progressing with a new import-substitute product at Kurkumbh, with mechanical completion expected by February-March 2026 and commercialization in Q1 FY26-27. This project involves a capital expenditure of approximately ₹120 crores and is anticipated to be a profitable product with superior technology, targeting dyes, pigments, and electronics sectors. The company's total production capacity is estimated at up to 2 lakh tons, with a saleable capacity of about 1.5 lakh tons after accounting for internal consumption.

The acetonitrile market, while growing with new uses, has not yet fully benefited from anti-dumping duties imposed at the end of June. Although prices have marginally improved, aggressive price dropping by Chinese competitors has limited the full impact of the duties. Management expects to see real benefits, primarily in volume, from Q4 FY26 onwards. The company is also exporting acetonitrile worldwide and is considered the number one Indian player.

Recent Middle East disruptions and US sanctions on Iran have impacted the supply chain for raw materials like ammonia, which are sourced through distributors. While the company's current material requirements are covered, a short-term blip in prices is anticipated. However, management expects the supply chain to readjust quickly due to alternate routes and market flexibility, leading to price normalization in the long run, as there is an overall capacity overhang for these products globally.

Alkyl Amines maintains an active R&D pipeline with a couple of new products under consideration for future investments. Decisions regarding these investments, which will be in areas of the company's technological strengths, are expected within the next 3 to 6 months. The company aims to return to its normal growth trajectory as global trade situations stabilize, having already surpassed 2019 volumes and profitability levels.