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Macro headwinds balanced by expansion and innovation

Earnings below our estimate

• Alkyl Amines Chemicals (AACL) reported a muted operating performance in 1QFY26 as EBITDA declined 3% YoY. Gross margin contracted 120bp YoY to 45.8%. Employee expenses increased by 30bp YoY to 7% YoY, while other expenses declined 60bp YoY to 20%.
• The company is expanding capacities, introducing new products, and upgrading manufacturing facilities. These initiatives are supported by inhouse R&D focused on enhancing quality and achieving cost efficiencies. In FY26, AACL aims to prioritize sustainable growth through increasing market share in existing products and launching new offerings.
• We broadly maintain our FY26/27 estimates, supported by the ramp-up of the newly commercialized plant, initiatives to increase market share in existing products, and new offerings. We value the stock at 45x FY27E EPS to arrive at a TP of INR2,270. Reiterate Neutral.

Muted operating performance

• Revenue grew 1% YoY to INR4b (est. INR4.2b), while gross margin contracted by 120bp YoY to 45.8%.
• EBITDA margins contacted 90bp YoY to 18.9% (est. 18.6%). Employee costs as a percentage of sales stood at 7% (vs. 6% in 1QFY26), while other expenses stood at 20% vs. 21% in 1QFY25.
• EBITDA stood at INR766m, down 3% YoY (est. of INR784m). .
• Adj. PAT stood at INR494m, up 1% YoY (est. of INR528m).

Valuation and view

• AACL remains focused on strengthening its global presence by developing efficient, cost-effective processes for high-grade and extra-pure specialty products, enhancing the efficiency of existing processes, and exploring emerging process intensification techniques for both new and existing products.
• We estimate a CAGR of 10%/16%/18% in revenue/EBITDA/PAT over FY26-27. The key risk to our outlook is high competition (domestic and imports, mainly from China), leading to limited pricing power. .
• We largely maintain our FY26/FY27 estimates and value the stock at 45x FY27E EPS to arrive at a TP of INR2,270. Reiterate Neutral.

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