Ami Organics recorded robust growth in the December 2024 quarter

This stock has generated 105.4% returns in 1 year. Why Ami Organics is the stock pick of the week for 4 analysts While its revenue increased by 65% year-on-year, adjusted PAT surged by 165%, driven by growth in APIs, operational efficiencies, and a better product mix. High entry barriers due to complex chemistries and regulations and strong R&D for innovation strengthen the business

The pharma intermediates and specialty chemical manufacturers reported a strong performance in the December 2024 quarter with revenue and net profit surpassing Reuters-Refinitiv estimates by 8.7% and 22.7%, respectively. While the revenue registered 65% year-on-year growth, adjusted PAT grew by 165%. The performance was driven by a ramp-up in the CDMO business and consistent growth in advanced pharmaceutical intermediates (APIs).

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Furthermore, better product mix and operational efficiencies boosted EBITDA margins which jumped by 907 basis points on a year-on-year basis. The management has raised its 2024–25 revenue guidance from 30% to 35%, indicating improved visibility for the March 2025 quarter. The company operates with four manufacturing facilities and serves diverse end-use industries including pharmaceuticals, cosmetics, fine chemicals,semiconductors,s and battery chemicals.

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The company benefits from strong growth in specialty chemicals and APIs. Rising demand in agrochemicals, cosmetics, and pharma boosts the former, while an aging population, tech advancements, and chronic diseases drive the latter. Its 2023-24 annual report projects a 6.1% CAGR for the global chemicals market by 2028 and 7.2% for APIs by 2029. Multiple strongholds help the company maintain its edge. High entry barriers due to complex chemistries and regulations, strong R&D for innovation, a diversified global customer base, process optimisation, new technologies, and cost management strengthen the business. The management employs focused strategies for its specialty chemicals and API segments.

In specialty chemicals, it is leveraging the capability of Baba Fine Chemicals (a subsidiary) to expand the semiconductor chemical business and develop electrolyte additives for the growing battery chemicals business. For APIs, the company aims to scale up production and expand its innovator business with a CDMO focus.

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The company is also benefiting from the operational efficiency of its Ankleshwar plant, which is an automated intermediates plant that enhances safety, quality, and ensures greater transparency. Moreover, its ongoing capex plans for the Ankleshwar site and electrolytes division will support growth in the future. A recent Ambit Capital report says that the company is well-placed to capitalise courtesy investment in people, capacity and pipeline. It lists long-term contract with Fermion for darolutamide, large-product opportunities, such as Rivaroxaban and Apixaban and recent capacity creation in Ankleshwar as the key positives. The stock has significantly outperformed the market benchmark in the last one year with 105.4% returns compared to the BSE Sensex with 7.9% returns.

Selection methodology: We pick the stock that has shown the maximum increase in ‘consensus analyst rating’ during the past three months. The consensus rating is arrived at by averaging all analyst recommendations after attributing weights to each of them (1 for strong buy, 2 for buy, 3 for hold, 4 for sell, 5 for strong sell). An improvement in consensus analyst rating indicates that the analysts are getting bullish on the stock. Only stocks with more than five analysts covering them are considered. You can see similar consensus analyst rating changes during the past week in ETW 50 table.
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This story originally appeared on: India Times - Author:Faqs of Insurances