Ami Organics Limited, a leading manufacturer of specialty chemicals, saw its stock price surge by 3.4% on the National Stock Exchange (NSE) today. The stock closed at ₹1,332.75, up ₹43.85 from its previous close of ₹1,288.90.The stock opened at ₹1,290.00 and touched an intraday high of ₹1,339.95 before closing at ₹1,332.75. The trading volume was higher than usual, indicating increased investor interest in the stock.The primary reason behind this growth is the upgrade by HDFC Securities, a leading brokerage firm. HDFC Securities has upgraded Ami Organics to a ‘Buy’ rating with a target price of ₹1,600 per share. The upgrade is based on the following factors:
- Ramp-up in Fermion contract: Ami Organics has secured a significant contract with Fermion, a leading pharmaceutical company, which is expected to contribute to the company’s revenue growth.
- Expansion of specialty chemicals portfolio: The company has been actively expanding its portfolio of specialty chemicals, which are expected to generate higher margins.
- Balance sheet turning net cash in Q1FY25: Ami Organics’ balance sheet is expected to turn net cash positive in the first quarter of fiscal year 2025, indicating strong financial health.
- Increase in better-margin CDMO contribution: The company’s Contract Development and Manufacturing Organization (CDMO) business is expected to contribute a larger share of revenue, which will result in higher margins.
- Ramp-up in capacity utilization of specialty chemicals plant: Ami Organics’ specialty chemicals plant is expected to operate at higher capacity utilization levels, leading to improved profitability.
HDFC Securities expects Ami Organics’ margins to improve by 508 basis points from 17.9% in FY24 to 23% in FY26. The brokerage also expects the company’s profit to grow at a 38% compound annual growth rate (CAGR) over FY24-26, driven by a 29% CAGR in EBITDA.Investors are advised to closely monitor the company’s performance and consult with financial advisors before making any investment decisions.
Note: All data as on 9:34, 28 Aug 2024
Disclaimer: This article is for informational purposes only and reflects the views of HDFC Securities. The opinions expressed herein do not necessarily represent the views of the author or the publication. Readers are encouraged to conduct their own research and consult with a qualified financial advisor before making any investment decisions. The author and publication assume no responsibility for any losses or damages arising from reliance on the information provided in this article.
