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HDFC Securities Institutional Equities
We retain our 'Add' rating on Ami Organics Ltd., with a target price of Rs 1,360 (weighted average cost of capital 11%, terminal growth 6%), on the back of-
expansion of its speciality chemicals portfolio,
Fermion contract revenue accruing from Q4 FY24, and
strong advanced pharma intermediates product pipeline.
The stock is currently trading at 37 times FY25E earnings per share. We expect the Ebitda margin to improve by 222 basis points, from 20% in FY23 to 22% in FY26E, owing to a ramp-up in capacity utilisation in the speciality chemicals business and an increase in the value-added items in the product portfolio.
We expect Ami Organics' profit after tax to grow at a 25% compound annual growth rate over FY23-26E, led by a 27% CAGR in Ebitda.
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