Balaji Amines Limited — Q4 FY24 earnings call

Call held 10 May 2024

Management summary

Balaji Amines reported a strong rebound in Q4 FY24, with consolidated revenue increasing by 7.9% QoQ to INR 423 crores and EBITDA margin expanding to 25%. This performance was driven by higher volume uptake and stabilized input costs. The company is actively pursuing significant capacity expansions and new product introductions, including n-butylamines, methylamines, and dimethyl ether, alongside a substantial CAPEX plan for its subsidiary, BSC Unit II, and a new solar power plant to enhance operational efficiency and sustainability.

Highlights

  • Consolidated Revenue from operations for Q4 FY24 stood at INR 423 crores, up 7.9% QoQ.

  • Consolidated EBITDA for Q4 FY24 was INR 106 crores, with EBITDA margin at 25%, expanding 400 bps QoQ.

  • Consolidated PAT for Q4 FY24 was INR 72 crores, up 28.6% QoQ.

  • New n-butylamines production commenced at Unit IV, adding an annual installed capacity of 15,000 metric tons.

  • Methylamines project is expected to be commissioned by December 2024, and Dimethyl Ether (DME) project by March 2025.

  • The company is undertaking a significant CAPEX of Rs. 750 crores for its subsidiary, BSC Unit II, with the first phase (Rs. 300-400 crores) funded by internal accruals.

  • A 20-megawatt solar power plant is planned, with an 8-megawatt Phase 1 operational by December 2024, expected to cover 60-70% of the power bill.

  • Management guided for minimum 10% standalone volume growth and 21-24% EBITDA margin for FY25.

Key financials

2 periods

Headline

  • Consolidated Revenue
    ₹423 Cr
    QoQ +7.9%
  • Consolidated EBITDA
    ₹106 Cr
    QoQ +27.7%
  • Consolidated EBITDA Margin
    25%
  • Consolidated PAT
    ₹72 Cr
    QoQ +28.6%
  • Consolidated Diluted EPS
    ₹21
    QoQ +37.8%

FY24

  • Consolidated Revenue
    ₹1,671 Cr
    YoY -29.5%
  • Consolidated EBITDA
    ₹353 Cr
    YoY -43.4%
  • Consolidated EBITDA Margin
    21%
  • Consolidated PAT
    ₹232 Cr
    YoY -42.9%

What they filed

Q1 FY27: revenue up 27.4%, net profit up 110.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue347 313 353 358 341 −2%331 +6%395 +12%456 +27%
EBITDA61 46 60 55 60 −2%57 +24%94 +57%116 +111%
Net profit41 31 40 37 37 −10%31 +0%65 +63%78 +111%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Volume
27,984 metric tons Total
  • Amines Derivatives 9,676 metric tons 34.6%
  • Specialty Chemicals 9,398 metric tons 33.6%
  • Amines 8,910 metric tons 31.8%

Guidance & targets

Capacity

  • Methylamines plant commissioning Capacity · December 2024 · High confidence around the end of December 2024
    The project is likely to be commissioned around the end of December 2024.

    — D Ram Reddy, Managing Director

  • Electronic grade DMC plant commissioning Capacity · FY25 · High confidence FY '24-'25
    Electronic grade DMC plant set to commission in FY '24-'25 holds promising prospectus in India EV battery market due to its exclusive production status and a robust installed capacity of 15,000 MT per annum.

    — D Ram Reddy, Managing Director

  • DME manufacturing project launch Capacity · March 2025 · High confidence by March 2025
    At Unit IV, we are currently working on a DME manufacturing project set to be launched by March 2025

    — D Ram Reddy, Managing Director

  • N-Methyl Morpholine annual capacity Capacity · N/A · High confidence 3,000 tons per annum
    Number one, N-Methyl Morpholine Company, 3,000 tons per annum

    — D Ram Reddy, Managing Director

  • N-(n-butyl) Thiophosphoric Triamide (NBPT) annual capacity Capacity · N/A · High confidence 2,500 tons per annum
    and N-(n-butyl) Thiophosphoric Triamide, which is called NBPT, 2,500 tons per annum.

    — D Ram Reddy, Managing Director

  • Solar power plant Phase 1 operational Capacity · December 2024 · High confidence by December 2024
    Phase 1 involves setting up an 8-megawatt capacity expecting to be operational by December 2024.

    — D Ram Reddy, Managing Director

  • Methylamine new plant capacity Capacity · by December '24 · High confidence 40,000 tons
    As you said that you are coming out with the 40,000 that is going to complete by about December '24. So, how much out of this 40,000 will be captively consumed? And yes, that's my question on the proposed capacity out of this 40,000. ... At one Stroke.

    — D Ram Reddy, Managing Director

  • Total solar power plant capacity Capacity · N/A · High confidence 20 megawatts
    Actually, total plan is for 20 megawatts for which the investment will go around Rs. 120 crores.

    — D Ram Reddy, Managing Director

  • Piperazine monthly capacity Capacity · N/A · Medium confidence around 400 to 500 tons per month

    From 150 tons per month today

    we are expecting that we should do around 400 to 500 tons per month of Piperazine, if everything goes well.

    — D Ram Reddy, Managing Director

Capex

  • Hotel rooms addition cost Capex · N/A · High confidence Rs. 30 crores to Rs. 35 crores
    we have decided to add 40 rooms towards the south side of our existing structure building, which should cost us around Rs. 30 crores to Rs. 35 crores

    — D Ram Reddy, Managing Director

  • BSC Unit II first phase CAPEX Capex · N/A · High confidence Rs. 300 crores to Rs. 400 crores
    These are the products coming in the first phase, which will take about Rs. 300 crores to Rs. 400 crores investment.

    — D Ram Reddy, Managing Director

  • BSC Unit II total CAPEX Capex · N/A · High confidence Rs. 750 crores
    second phase, the additional Rs. 350 crores, which will become total Rs. 750 crores.

    — D Ram Reddy, Managing Director

  • Total solar power plant CAPEX Capex · N/A · High confidence around Rs. 120 crores
    total plan is for 20 megawatts for which the investment will go around Rs. 120 crores.

    — D Ram Reddy, Managing Director

Volume

  • Standalone volume growth Volume · FY25 · Medium confidence Minimum 10%
    Minimum 10%, I'm telling you. I'm telling you very conservatively, but minimum 10% without considering any expansions.

    — D Ram Reddy, Managing Director

Margin

  • EBITDA margin Margin · FY25 · High confidence 21% to 24%
    It should be between 21% to 24%. Minimum 21%, maximum 24% should be there.

    — D Ram Reddy, Managing Director

Revenue

  • BSC Unit II minimum revenue Revenue · N/A · Medium confidence INR 1,000 crores minimum
    It's too early to say, but definitely, it should cross INR 1,000 crores minimum with this unit 2 alone.

    — D Ram Reddy, Managing Director

Capacity Utilization

  • DMF plant capacity utilization Capacity Utilization · from this quarter onwards · High confidence more than 70%
    DMF, this year, from this quarter onwards, you will see we will be utilizing more than 70%.

    — D Ram Reddy, Managing Director

Risks & concerns

  • Impact of recycled material from China on specialty chemical margins

    medium

    Recycled material from China, after 2-3 uses in electronics, is being purified and sold, impacting NMP, GBL, 2P/NEP markets.

    Analyst acknowledged

  • Delays in EV battery market affecting DMC/PG plant utilization

    medium

    DMC and Propylene Glycol plants are operating at 30-40% capacity because the lithium battery companies, for which they were primarily meant, have not yet commenced production.

    Management acknowledged

Areas of evasion (1)

  • Global demand for n-butylamine

Q&A highlights

3 direct
Impact of recycled materials on Specialty Chemicals volumes and margins Direct
See, these products what happened in between, a lot of reused material was coming. I don't know, the God only can save these people. Many people started using recycled material, which is coming from China, which is after using 2, 3 uses, in the electronics, the material is removed. So, that has given some impact.

Reveals a key external factor (China's recycled material dumping) impacting the profitability of high-margin specialty chemicals, a critical segment for the company.

Asked by Nirav Jimudia, Anvil Research

Low capacity utilization of DMC and Propylene Glycol plants and dependence on EV battery market Direct
See, it is operating presently 30% to 40%. You are well aware these plants were meant for the lithium batteries. Actually, lithium batteries companies, last 4-5 years, they were talking. Last 4-5 years. Just in they were coming like this, they were talking. But unfortunately, nobody has done kickstart.

Highlights the underperformance of a significant new capacity due to delays in the anticipated end-user market (EV batteries), indicating a potential drag on returns until demand materializes.

Asked by Nirav Jimudia, Anvil Research

Details on BSC Unit II CAPEX, product pipeline, and funding strategy Direct
Regarding products, the sodium cyanide will be the first product. And there are 6 products, which are going in the first phase. One is triethyl orthoformate... These are the products coming in the first phase, which will take about Rs. 300 crores to Rs. 400 crores investment. ... 99%, the first phase will be total internal accruals only.

Provides crucial details on the company's largest upcoming CAPEX project, including specific products, investment phasing, and funding sources, which is vital for assessing future growth and financial health.

Asked by Rajeev Rupani, Individual Investor

3 min read 6 chapters

Detailed narrative

Q4 FY24 Performance and FY24 Overview

Balaji Amines demonstrated a strong rebound in Q4 FY24, with consolidated revenue from operations increasing to INR 423 crores, marking a 7.9% QoQ growth. Consolidated EBITDA for the quarter stood at INR 106 crores, achieving a 25% margin, which represents a 400 bps expansion QoQ. Consolidated PAT also saw a significant increase of 28.6% QoQ, reaching INR 72 crores. For the full fiscal year 2024, consolidated revenue was INR 1,671 crores, a 29.5% YoY decline from FY23's INR 2,371 crores, with EBITDA at INR 353 crores (down 43.4% YoY) and a margin of 21%.

Strategic Capacity Expansions and New Products

The company is actively pursuing several key expansion projects. Production of n-butylamines has successfully commenced at Unit IV, adding an annual installed capacity of 15,000 metric tons. The methylamines project is progressing well and is expected to be commissioned by the end of December 2024. Additionally, an Electronic Grade DMC plant, with a robust installed capacity of 15,000 MT per annum, is set for commissioning in FY25, targeting the promising India EV battery market. A Dimethyl Ether (DME) manufacturing project at Unit IV, a substitute for LPG, is slated for launch by March 2025, with a capacity of 100,000 tons.

BSC Unit II Development and Funding

Balaji Specialty Chemicals (BSC) Unit II, the company's subsidiary, is undergoing significant development with a total estimated CAPEX of Rs. 750 crores. The first phase of this expansion, focusing on products like sodium cyanide, triethyl orthoformate, and EDTA derivatives, will require an investment of Rs. 300-400 crores, which will be entirely funded through internal accruals. The subsequent second phase, requiring an additional Rs. 350 crores, may involve borrowing Rs. 50-100 crores. Once fully operational, BSC Unit II is projected to generate a minimum of INR 1,000 crores in revenue.

Renewable Energy Initiatives

Balaji Amines is committed to enhancing its operational sustainability through renewable energy. The company plans to establish a 20-megawatt solar power plant with a total investment of approximately Rs. 120 crores. The first phase, an 8-megawatt capacity, is expected to be operational by December 2024. This initial phase is projected to cover 60-70% of the company's power bill, with the full 20-megawatt capacity intended to meet 100% of the company's power requirements after all planned expansions.

Market Dynamics and Margin Outlook

Management observed an improvement in demand, with Q4 FY24 volumes showing an 8.25% year-on-year improvement, and anticipates this positive momentum to continue into the next quarters. For FY25, the company has guided for a minimum 10% standalone volume growth, excluding new expansions, and expects to maintain an EBITDA margin in the range of 21% to 24%. While challenges from recycled material impacting specialty chemical margins were acknowledged, the company foresees increased NMP consumption driven by the growth of lithium battery companies.

Outlook for Key Products

The new methylamine plant, with a 40,000-ton capacity, is set to be fully operational by December 2024, with its entire output designated for captive consumption. This will enable the DMF plant to operate at over 70% utilization from the current quarter onwards. Piperazine capacity is targeted for a significant expansion from its current 150 tons/month to an estimated 400-500 tons/month, aiming to meet the country's consumption. The n-butylamines plant, with a 15,000-ton capacity, is expected to operate at 30-40% utilization in FY25, with potential for 70-80% utilization if domestic demand (8,000 tons) is considered.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Chemicals earnings calls