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ADD benefits on ACN to be assessed in the medium term

* The anti-dumping duty (ADD) on Acetonitrile (ACN) imports from China, Russia, and Taiwan may offer Alkyl Amines Chemicals (AACL) a margin and market share upside from 2HFY26. However, the near-term impact is limited due to the pre-duty stocking. China’s continued access to SEZ markets and ongoing MIPA competition may partially offset the benefits.

* AACL is diversifying its product mix to reduce reliance on any single offering while expanding capacity through debottlenecking, a new Ethylamine plant, and repurposing assets for Methylamines. It faces competition, especially from Chinese players and domestic peers, but aims to maintain an edge through efficiency and quality.

* AACL expanded aliphatic amines capacity by ~30% in FY24 and is focusing on marginaccretive specialty products despite near-term demand headwinds. With a projected 15% revenue and 20% EPS CAGR over FY25–27, risks include intense competition and pricing pressure, while the recent ADD implementation could offer potential upside. We reiterate our Neutral rating with a TP of INR1,610 based on 30x FY27E EPS.

Long-awaited ADD levied on ACN

* The recent levy of ADD on ACN imports from China, Russia, and Taiwan is expected to influence trade dynamics over the next few quarters. Since the final imposition of duties may take up to 90 days, domestic customers are likely to front-load imports in the near term to build inventory ahead of any price correction. As a result, the impact of anti-dumping measures on domestic pricing and demand-supply equilibrium may remain muted in the first six months, with the real effect expected to emerge only in 2HFY26.

* India’s ACN market, with a total addressable market (TAM) estimated at 30- 35ktpa (including 5-6ktpa in SEZs), has been growing steadily at 7–10% annually across end-use segments. China accounts for nearly 45% of this market, while AACL mostly makes up the rest of the market. While the ADD could curb lowpriced imports in the domestic tariff area (DTA) segment, China may still continue exporting duty-free to SEZ units, partially limiting the effectiveness of the measure and preserving its foothold in select industrial pockets.

* For ACCL, the anti-dumping action presents an opportunity to recapture lost domestic market share and improve its margin that has been undercut by imports. However, sustained benefits will hinge on how effectively AACL can scale capacity and ensure competitive supply to SEZ and DTA customers alike. Meanwhile, competitive pressures from Chinese-origin MIPA (Mono Isopropyl Amine) remain, for which an ADD investigation is ongoing.

Portfolio expansion to de-risk dependence on any particular product

* To mitigate revenue concentration risks, AACL is strategically shifting its product mix, aiming to reduce dependency on any single product to 10% while targeting 5–10% revenue contribution annually from new offerings. However, this goal has not yet been fully realized. Many of AACL’s target derivative and specialty segments face direct competition from Chinese players, but management is confident in sustaining competitiveness through higher quality output and better production efficiency.

* In the Methylamines space, competitive pressures are set to intensify due to capacity additions by peers such as Balaji Amines and Aarti Industries, while products like DMA-HCL may see relatively lower headwinds. AACL is also undertaking debottlenecking initiatives in DMA and is actively evaluating inorganic growth opportunities, including JVs and mergers. A new product targeted at the dyes and pigments segment is also under development, with INR700m–800m of capex already completed and mechanical commissioning expected by Dec’25.

* AACL had also undertaken notable expansion at its Kurkumbh facility by commissioning a new 35ktpa Ethylamine plant in FY24 (~65% utilization in 3Q), at a capex of INR4b. With this, the older Ethylamine facility is being repurposed for Methylamines, effectively expanding capacity in a cost-efficient manner. The company is also enhancing existing infrastructure and introducing new products to broaden its specialty chemicals portfolio and align with market demand.

Valuation and view

* AACL boosted its aliphatic amines capacity by ~30% in FY24. The total capacity stands at ~200ktpa (including derivatives and specialty chemicals). Additionally, AACL is venturing into new specialty products that are likely to improve its margins amid robust demand (near-term headwinds persist) for amine derivatives and specialties.

* Over FY25-27, we estimate a ~15% revenue CAGR and a 20% EPS CAGR. The key risk to our outlook is high competition (domestic and imports, mainly from China), leading to limited pricing power. The commodity nature of some products could also make AACL susceptible to raw material price fluctuations. Upside risks could come from the recent implementation of ADD on ACN (investigation on MIPA going on).

* The stock is trading at ~37x FY26E EPS and ~23x FY26E EV/EBITDA. We reiterate our Neutral rating on AACL with a TP of INR1,610, based on 30x FY27E EPS.

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