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IDBI Capital Report
Ami Organics Ltd. posted a subdued financial performance in Q2 FY24. While revenue grew by 17% YoY, adjusted profit after tax declined by 23% YoY. Gross margins stood at 41% as against a usual run rate of 46-48%. Ebitda margins stood at 14.4% as against a usual run-rate of 20-22%.
Lower gross margins were on account of higher price erosion and higher sale of low margin products namely specialty chemicals and domestic pharma intermediate sales.
Ami Organics factor in the revenue guidance cut by the management owing to deferment in product launch of a key product coupled with China led pricing pressures.
We trim earning per share estimates by 18% and 16% for FY24 and FY25 respectively for FY24 and cut target multiple from 40 times to 35 times.
We maintain our 'Buy' rating with a lowered target price of Rs 1,300 (earlier Rs 1,450) at 35 times FY26 earning per share factoring in lower earning per share.
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