Ami Organics share price target 2025, 2030

Ami Organics share price target 2025, 2030: Hello, my dear investors!. Today we will have a look at Ami Organics Limited stock analysis. We will analyse its financial and technical aspects to reach the conclusion of what should be Ami Organics share price target for 2025 to 2030.

Overview of Ami Organics

Ami Organics Limited is a company headquartered in Surat (GUJRAT), manufactures speciality chemicals. The company has its own R&D laboratories that are licensed as per the Indian Factory act. It manufactures pharmaceutical intermediates required for making NCE and API in India and overseas. 

Ami Organics manufactures its products in three manufacturing facilities in Gujarat’s Sachin, Ankleshwar and Jhagadia. 

The company exports its products to more than 50 countries like the USA, China, Japan etc. The client list of Ami Organics includes brands like Cadila Healthcare, Cipla and many more.

The company has been working with 13 major clients for the past 10 years and 50 clients for more than 5 years.

Ami Organics share price target 2025, 2030

Ami Organics share price table

In this article, we will analyze its revenue, net profit, ratios, and other financials to conclude what will be the Ami Organics share price target for 2025 to 2030.

If you do not want to go through our research and stock analysis, then you can refer to the table below for share price targets.

Ami Organics share price target 2024

If you look at the growth of the company it purchased two manufacturing units from Gujarat Organics on 31 March 2021 which allowed them to supply more specialty chemicals and preservatives. The company has also started a new subsidiary called Ami Organics Electrolytes Private Limited in June 2022.

The projected Ami Organics share price target for 2024 is Rs 1440 minimum and maximum target is Rs 1497.

Ami Organics share price target 2025

Since 2017, Ami Organics has seen exponential growth every year; within six years its revenues increased almost four-fold and operating profit margins from 14-20% in just that short span of time.

Over the last three years, margins have consistently hovered at 20% while net profit has significantly grown from 12 crores in 2017 to 83 crores by 2023 – showing growth at an incredible pace.

If the company keeps growing at the same pace as the last 6 years, we can easily see Ami Organics hit a share price target of Rs 1595 in 2025 and a maximum target of Rs 1625.

Ami Organics share price target 2030

Financially speaking, the company has experienced rapid expansion. Sales for March 2017 totalled Rs 160 crore and have shown consistent upward momentum to now total Rs 617 crore in March 2023.

Profits have multiplied sixfold in just six years. ROCE of 20.6 and ROE of 15% can be seen. As for leverage structure, debt to equity ratio stands at only 0.16; additionally it boasts an extremely small market cap at only around 4,000CR and PE ratio around 53; cashflow has also remained positive with exception for March 2022.

All financial numbers suggest that Ami Organics will achieve a minimum share price target of Rs 2471 by 2030 and a maximum of Rs 2508.

Ami Organics financials

Ami Organics Ltd has shown exceptional potential and growth in its financial numbers, becoming a small cap company with a market cap of Rs 4105 crores and currently trading at an equity price of 1120 while still boasting an incredible PE ratio of 53.4. 

It shows investors have faith in Ami Organics Ltd as investors trust them enough to purchase its stocks at this current stock price of 1120.

Book value per share is Rs 171 while dividend yield is only 0.28%. The company utilises capital efficiently as evidenced by an impressive Return on Capital Employed (ROCE) score of 20.6%; Additionally, an ROE value of 15.0% shows they also utilise investors’ money effectively.

Debt-to-equity ratio stands at 0.16 and indicates a financially stable business with minimal debt to service. Earning per Share currently stands at Rs 13.9 which indicates profitability with profit after tax (PAT) at Rs 76.99 crores for 2023.

In conclusion, significant market cap, excellent balance sheet, net profit and other strong financial numbers of Ami Organics prove that the company is financially stable and a great buy for investors. We recommend you to keep monitoring the company if you are interested. 

Ami Organics performance from 2017 to 2023

Ami Organics is a research and development driven manufacturer of specialty chemicals that find usage in two sectors, one is Pharma intermediate, and another is specialty chemical. Pharma intermediate is the advanced intermediate and has got the maximum share of its business at 84% and Specialty chemical has got around 16% share. 

Looking at other aspects, the company achieved revenues of approximately Rs 617 crores with PAT at approximately 83 crore rupees during FY23 alone and offered 521 products with 70 new offerings introduced that same year.

So far, this company is steadily releasing new products, featuring an expansive and varied product set. Customers include over 500 with 60 added during FY23 alone.

Compare that figure with 59% of total revenue coming from exports in FY23; the company has three manufacturing facilities and one R&D centre.

Also Read: Yasho Industries Share price target

Shareholding pattern

Let’s talk about Ami Organics shareholding. FIIs have shown good interest because they’ve increased the stake from around 1.8% in June 2022 to 7.15% in September 2023. Even DIIs have increased their stake from 3.6% to 5.95% in the last couple of quarters.

Public holding has reduced in the company from 50% to 47.97%. Promoters are currently holding around 38.9% stake. So, the financials are also looking solid.

Ami Organics future plans

Now let’s discuss the Q2 concall update and future guidance. Let’s talk about the company’s performance in Q2FY24. In Q2 companies exports stood at 54% and domestic business stood at 46%. The export has slightly reduced, and domestic business has increased.

If you look at the update on active Pharma intermediate. on the Fermion contract which is a very important contract by Fermion. They’ve signed a new contract for additional Advanced intermediates taking the total product under CDMO contract to three products and they’re on track to start the production from Q4 of FY24. 

Currently it’s Q3 they will start from Q4 from their Ankleshwar unit. Coming back to the update on specialty chemicals, they’ve received an order for a UV absorber product used in the paint industry expected to start production from Q3FY24.

The electrolyte additives part, company is saying that they are in advanced stages of negotiation of contracts with a couple of customers.  Once they announce the final deal this news is going to have a positive impact on the share price.

Sure, a lot of people are waiting for the update on electrolyte additives. If you look at the capex update basically the company has invested around 190 CR in Ankleshwar unit. 

This is an ongoing investment and the block one of that particular phase is ready and on track to commence the production activity in Q4 of FY24.

Final update is on Baba Fine Chemicals. Ami Organics has completed the acquisition.

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Reasons for Weak performance of Ami Organics

What is the reason for Ami Organics Revenue and EBITDA nor growing faster. First of all, the biggest reason is that there remains a consistent over Supply from China across the chemical value chain.

If you are following the chemical sector, you would have heard the news that there’s a lot of dumping happening from Chinese companies and Ami Organics is also getting impacted because of that.

This dumping from China has led to a decline in raw material cost exerting downward pressure on the pricing of the finished goods across the industry. Even as things seem to be improving, Chinese competition continues to outpace Demand.

This is one of the biggest reasons why the entire chemical sector in India is struggling. 

Another important point Ami Organics made is that there’s not much impact of Chinese competition, but their product competitors have got cheaper raw materials, and they are quoting a very low price to the customer and because of that Ami Organics also had to reduce their price and that resulted in fall in Revenue growth.

Hope you got a good sense of why the revenues of Ami Organics have fallen.  As compared to 20-25% growth because they are at 17%.

Another important aspect is on the margin front where they said that in terms of margin because of higher sale of lower margin products and the persistent pricing pressure throughout the quarter impacted their margins.

Conclusion

Overall, Q2 performance suffered due to Chinese competition has harmed their Top Line. Other contributing factors are a higher mix of lower margin products plus increased employee costs due to hiring for Ankleshwar unit opening. All these factors harmed margins along with delayed launch of key products that stunted growth.

Taken at face value, management guidance suggests margins will return to previous quarter levels by Q3, an encouraging sign. Furthermore, delayed products would also be released during Q4 of FY24 as planned and Baba fine chemicals integration is currently taking place post-acquisition with expectations of exponential growth over time.

Ami Organics plans on opening one block at their Ankleshwar unit by Q4 of FY24 and all three by end-Q1 of FY25 with volume growth expected between 20-25%; top line revenue expected to expand 20-25% due to topline compromise in order to protect market share loss. Finally on electrolyte business they stated they have placed orders for raw material that they expect delivery of in Q4.

Company management has provided positive guidance, with negotiations ongoing with various customers and an uptick in share price from Rs 1400 levels to around Rs 1100 levels creating an opportunity.

Investors could see this as an attractive opportunity. Please conduct your own due diligence prior to investing.

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