Unlisted Shares

Revenue:
• Revenue increased by 53% year-on-year (y-o-y) in FY23, driven primarily by strong sales growth in EDA. Export revenue surged by 112% y-o-y to ₹ 261 Cr. (33% of sales) in FY23, reflecting expanding export opportunities.
• The company's growth was fueled by rising demand from the Indian chemical industry, particularly from the pharma, agro, and specialty chemicals segments. In FY23, 15% of the company's sales were sourced from its parent company, while 37% of its raw materials were procured from the same source. Capacity utilization increased from 56% to 72% in FY23, enabling the realization of economies of scale.
• The company's profits grew by 62% y-o-y in FY23. Despite stable gross margins, PAT margins improved from 22% in FY22 to 23% in FY23, indicating enhanced profitability.

• Return Ratios:
• ​In FY23, there was consistent growth in Return on Capital Employed (ROCE) and Return on Assets (ROA), attributed to an increase in revenue facilitated by higher capacity utilization, a reduction in the cash conversion cycle, and an improvement in profitability. The Capital Employed demonstrated a steady rise, supported by robust retained earnings, while debts were significantly reduced. This underscores a successful deleveraging strategy without compromising on growth objectives.
• Although Return on Equity (ROE) experienced a marginal decline, this can be attributed to a substantial increase in book value fueled by retained earnings. It's noteworthy that FY22 witnessed an abnormal expansion of ROE due to a sharp rise in the asset turnover ratio and the impact of a low base effect.
• Looking ahead, profitability in the coming years is expected to be bolstered by new greenfield expansions, particularly in higher-margin products such as HCN and NACN, among others.
  

Investment Thesis: 

• BSCL stands as the sole domestic manufacturer employing the reductive MEA process, producing high-margin specialty chemicals like Ethylenediamine (EDA), Piperazine (PIP), Diethylenetriamine (DETA), Amino Ethyl Ethanol Amines ("AEEA"), and Amino Ethyl Piperazine ("AEP"). The company exudes optimism regarding its product development pipeline and is actively engaged in debottlenecking existing plants to augment current production capacity by 10-15%.
• Recognizing the immense potential of downstream/value-added products as major growth drivers, BSCL is diligently pursuing their development. These products, including EDTA, NEPIP, and NMPIP, are currently heavily reliant on imports. However, BSCL is confident in its ability to substitute these imports with domestic manufacturing, thereby fostering self-reliance and economic growth.
• BSCL has consistently delivered above-average returns on investments and is projected to maintain this impressive track record for the next three years. Given the industry's average P/E ratio of 31 and the company's anticipated doubling of profits in the coming years, the current price represents a compelling investment opportunity.

Key StakeHolders: ​Balaji Amines Ltd. (BAL) the company's promoter is a leading manufacturer of specialty chemicals in India. BAL has a strong focus on research and development and has developed a number of proprietary technologies for the production of specialty chemicals. BAL is listed in the domestic bourses and is an eminent player of Indian Chemical Sector.