Shares of specialty chemical stock Alkyl Amines gave astronomical returns to its long-term investors. The stock soared from ₹22 on August 31, 2012, to currently trade around ₹3,000 giving 13,536 percent returns to its investors in the last 10 years.
An investment of ₹1 lakh in the stock in August 2012 would have turned to ₹1.36 crore currently.
However, the recent past has not been very exceptional for the stock amid continued market volatility on the back of negative domestic and global trends.
The smallcap stock lost around 30 percent in the last 1 year and 15 percent in 2022 YTD. In the 8 months of 2022, the stock gave positive returns in just 3 months and negative returns in 5.
It started the year in the red, falling nearly 20 percent between January and March. The scrip then witnessed some recovery in April, rising 11 percent. However, in May and June, the stock again fell around 15 percent.
Post that the stock has been in the green rising 16 percent in July in the back of positive cues like moderation in inflation and foreign investor inflows returning to India. In August, the stock was flat, up just 1 percent for the month.
Alkyl Amines is engaged in the business of manufacturing and marketing various aliphatic amines, amine derivatives and other specialty chemicals. It supplies amines and amine-based chemicals to the pharmaceutical, agrochemical, rubber, chemical and water treatment industries.
In the June quarter, the net profit of the firm rose 4.25 percent YoY to ₹81.88 crore as against ₹78.54 crore during the same quarter last year. Meanwhile, its sales jumped 20.84 percent YoY to ₹473.48 crore in the quarter under review versus ₹391.81 crore during the previous quarter ended June 2021.
On the back of the weak performance recently, brokerage house HDFC Securities maintains a SELL on Alkyl Amines with a price target of ₹2,375 per share, indicating a potential downside of around 21 percent.
HDFC believes that the current valuation already factors in positives from the potential volume growth, post doubling of the acetonitrile plant capacity and 40 percent additional capacities of the aliphatic amines plant. The rising raw material prices are looking as a dampener and can continue to put pressure on the margins in the near term, it added.
Sharing insights on the specialty chemical space, brokerage house Motilal Oswal, in a recent report, stated that there is an increased focus on cost-cutting and movement from batch to continuous process that helps reduce space requirement as well as opex drastically through a decline in usage of utilities and waste reduction.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.