Alkyl Amines Chemicals’ earnings call for Q2 FY’26 revealed a subdued first half due to demand pressures and the impact of US government actions, despite volumes being marginally up. While topline remained flat due to subdued prices, the company managed to maintain profitability. Challenges include effects on direct exports to the US, customer impact, increased competition from Chinese players, and sanctions on Indian distributors. The company anticipates a gradual recovery, but volume growth will likely be lower than the normal 10-15%.
Financial Overview
The first half of the fiscal year FY’26 has been challenging for Alkyl Amines Chemicals due to demand pressures. The company experienced marginally higher volumes, but the topline remained flat due to subdued prices.
Key Challenges and Impact Factors
Several factors have impacted the company’s performance:
- US Government Actions: Direct exports to the US have been affected, along with customers impacted by reduced US exports.
- Chinese Competition: Increased competition from Chinese players is impacting the domestic market.
- Sanctions: Sanctions on some Indian distributors within the supply chain have caused disruptions.
Segment Performance
The methylamines segment experienced a greater impact compared to ethylamines, which are more domestically focused. Ethylamine prices have decreased, affecting contribution margins. Overall contribution remains fairly protected, with gross margins remaining mostly stable.
Methylamines Market Dynamics
The methylamine market faces an overhang of capacity with the entry of a fourth player, Aarti Drugs. Total market size is estimated at 80,000 to 90,000 tons, while total capacity exceeds 150,000 tons. Ethylamines market is estimated at 30,000 to 35,000 tons.
New Product Launch
The company anticipates launching a new product by February-March 2026, with commercialization expected in Q1 FY’27. The capital expenditure for this project is around ₹120 crores. This product will serve the dyes and pigments, electronics, and other sectors, acting as an import substitute.
Acetonitrile Market
Anti-dumping duties have been imposed on acetonitrile, but prices have only marginally improved. Chinese competitors are dropping prices, affecting the full benefit of the duties. The company expects both price and market share improvements moving forward. Potential also exists in the long term from use related to GLP-1 drugs.
Future Outlook
The company is running near capacity for total production volume. A new Isopropylamine plant is projected for duty protection by March of 2026.
Raw material prices for ammonia have increased, influenced by US sanctions on Iran and the Middle East. Raw material prices may rise temporarily before returning to normal as supply chains adjust.
Source: BSE
