The stock reacted with volatility, trading at ₹1,615.00 on February 3, 2026, up 3.73% from the previous close, though it remains 34.05% below its 52-week high of ₹2,448.80. The quarter's results have intensified concerns about the company's near-term prospects, with quarterly sales hitting their lowest level in recent quarters at ₹354.00 crores.
Financial Performance: A Quarter of Contraction
The third quarter of FY2026 marked a concerning inflection point for Alkyl Amines, with the company reporting its weakest quarterly performance in recent periods. Net sales of ₹354.00 crores represented the lowest quarterly revenue figure, signalling demand headwinds or pricing pressures in the specialty chemicals sector. The operating profit before depreciation, interest, and tax (PBDIT) excluding other income fell to ₹67.16 crores, the lowest in recent quarters, translating to an operating margin of approximately 18.97%.
The profit before tax less other income stood at ₹49.23 crores, marking another quarterly low and highlighting the deterioration in core operating profitability. The consolidated net profit of ₹42.19 crores reflected a dramatic 68.13% quarter-on-quarter decline, whilst earnings per share compressed to ₹8.26, the lowest amongst recent quarters.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Mar'20 | 234.77 | -8.62% | 49.21 | -18.54% | 20.96% |
| Dec'19 | 256.91 | +9.34% | 60.41 | +9.98% | 23.51% |
| Sep'19 | 234.97 | -11.74% | 54.93 | +49.80% | 23.38% |
| Jun'19 | 266.23 | +12.12% | 36.67 | +93.82% | 13.77% |
| Mar'19 | 237.45 | +11.65% | 18.92 | -14.89% | 7.97% |
| Dec'18 | 212.67 | -2.51% | 22.23 | -16.71% | 10.45% |
Looking at the annual trajectory, the company had demonstrated strong growth in FY2020 with net sales of ₹992.00 crores, up 17.30% year-on-year, and profit after tax of ₹196.00 crores. The operating margin excluding other income stood at a healthy 25.90% for the full year, with PAT margin at 19.80%. However, the recent quarterly performance suggests this momentum has reversed significantly.
Critical Operational Concerns
Margin Compression Alert: The company's operating margins have contracted substantially in Q3 FY26, with PBDIT excluding other income falling to quarterly lows. This deterioration reflects either pricing pressures, higher input costs, or unfavourable product mix changes. The profit before tax less other income at ₹49.23 crores marks the weakest quarterly core profitability in recent periods, signalling fundamental operational challenges that extend beyond temporary disruptions.
Balance Sheet Quality: Strong Foundation Amidst Headwinds
Despite the challenging quarterly performance, Alkyl Amines maintains a robust balance sheet that provides financial flexibility during this difficult period. As of March 2020, the company reported shareholder funds of ₹536.60 crores, with minimal long-term debt of ₹47.93 crores. This translates to a net debt-to-equity ratio of -0.11, effectively making it a net cash company when considering current assets and cash positions.
The company's fixed assets stood at ₹393.81 crores, reflecting continued capital investment, whilst current assets of ₹294.15 crores provided adequate liquidity coverage. The debt-to-EBITDA ratio averaged a negligible 0.10, indicating virtually no leverage-related stress. The interest coverage ratio averaged an exceptional 100.00 times, underscoring the company's ability to comfortably service its minimal debt obligations.
Return on capital employed (ROCE) averaged 30.25% over the measurement period, demonstrating historically strong capital efficiency, though the latest ROCE of 16.70% shows some deterioration. Return on equity (ROE) averaged 19.46%, a healthy level that reflects effective utilisation of shareholder capital, though the latest ROE of 12.62% indicates recent performance pressures. Higher ROE values signal better capital efficiency and profitability, making the recent decline to 12.62% a point of concern for investors monitoring operational effectiveness.
Industry Context: Navigating Specialty Chemicals Headwinds
The specialty chemicals sector has faced a challenging operating environment characterised by volatile raw material prices, fluctuating demand patterns, and intense competition. Alkyl Amines, which manufactures amines and amine derivatives across three facilities in Maharashtra and Gujarat, operates in a niche segment requiring technical expertise and consistent quality standards.
The company's five-year sales growth of 8.59% demonstrates moderate expansion over the longer term, though the five-year EBIT growth of -5.57% reveals profitability challenges. This divergence between revenue growth and earnings contraction suggests margin pressures have been building over several years, now manifesting acutely in the Q3 FY26 results.
Competitive Positioning Under Pressure
Alkyl Amines operates in a specialised segment of the chemicals industry where technical capabilities and customer relationships are crucial. However, the recent quarterly performance indicates the company may be losing pricing power or facing intensified competition. The substantial margin compression and revenue decline in Q3 FY26 suggest market share losses or unfavourable contract renewals, requiring management attention to restore competitive positioning.
Peer Comparison: Valuation Premium Without Performance
When benchmarked against specialty chemicals peers, Alkyl Amines presents a mixed picture. The company trades at a price-to-earnings ratio of 43.78 times, representing a premium to some peers but below others in the high-growth specialty chemicals space. However, this valuation appears stretched given the recent performance deterioration and negative financial trend.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Alkyl Amines | 43.78 | 5.53 | 19.46% | -0.11 | NA |
| Fine Organic | 32.74 | 5.29 | 24.79% | -0.46 | 0.26% |
| Aether Industries | 67.86 | 5.91 | 6.69% | 0.07 | NA |
| Privi Speciality | 41.06 | 8.83 | 12.36% | 0.84 | 0.17% |
| Jubilant Ingrevia | 33.96 | 3.22 | 9.86% | 0.25 | 0.81% |
| Clean Science | 34.57 | 5.66 | 22.95% | -0.25 | 0.75% |
Alkyl Amines demonstrates a competitive ROE of 19.46% compared to the peer average of approximately 15%, indicating historically superior capital efficiency. The company's price-to-book value of 5.53 times aligns closely with the peer average, whilst its net cash position (negative debt-to-equity of -0.11) provides financial strength. However, the P/E ratio of 43.78 times appears elevated, particularly given the recent earnings deterioration and negative financial trend.
Valuation Analysis: Premium Unjustified by Current Performance
Alkyl Amines currently trades at a market capitalisation of ₹8,259.76 crores with a share price of ₹1,615.00 as of February 3, 2026. The stock's valuation metrics paint a concerning picture when juxtaposed against deteriorating fundamentals. The P/E ratio of 43.78 times significantly exceeds the industry average of 39 times, suggesting the market has yet to fully price in the recent performance challenges.
The price-to-book value of 5.53 times, whilst in line with peers, appears stretched given the declining return on equity. The company's PEG ratio of 5.29 indicates the stock is expensive relative to its growth prospects, particularly concerning given the negative five-year EBIT growth of -5.57%. The enterprise value-to-EBITDA multiple of 27.38 times and EV-to-EBIT of 36.56 times both suggest premium valuations that are difficult to justify in the current operating environment.
The stock's valuation grade has been classified as "Very Expensive" since April 2020, reflecting consistent premium pricing. The current price of ₹1,615.00 sits 34.05% below the 52-week high of ₹2,448.80, yet only 7.20% above the 52-week low of ₹1,506.60, suggesting limited downside support at current levels. The absence of dividend yield further reduces the investment case for value-oriented investors.
Shareholding Pattern: Stable Promoter Base, Modest Institutional Interest
The shareholding structure of Alkyl Amines reflects strong promoter commitment with minimal institutional participation. Promoter holding has remained remarkably stable at 72.03% as of December 2025, with negligible quarter-on-quarter changes over the past year. The promoter group, led by Yogesh Mathradas Kothari with a 57.62% stake, demonstrates long-term alignment with shareholder interests, and importantly, there is zero promoter pledging.
| Quarter | Promoter % | FII % | MF % | Insurance % | Other DII % |
|---|---|---|---|---|---|
| Dec'25 | 72.03% | 3.46% | 1.35% | 0.05% | 1.61% |
| Sep'25 | 72.03% | 3.43% | 1.41% | 0.04% | 1.43% |
| Jun'25 | 72.03% | 3.25% | 1.31% | 0.05% | 1.24% |
| Mar'25 | 72.04% | 3.23% | 1.10% | 0.01% | 1.07% |
| Dec'24 | 72.00% | 3.23% | 1.05% | 0.01% | 0.71% |
Foreign institutional investor (FII) holdings have shown marginal improvement, rising from 3.23% in December 2024 to 3.46% in December 2025, though the absolute level remains modest. Mutual fund holdings have increased slightly from 1.05% to 1.35% over the same period, whilst other domestic institutional investors (DII) have more than doubled their stake from 0.71% to 1.61%, suggesting some institutional interest despite the challenging performance.
The low overall institutional holding of 6.46% indicates limited coverage from professional investors, which could contribute to stock price volatility and reduced liquidity. The predominance of non-institutional investors at 21.51% suggests a retail-heavy shareholder base that may react more emotionally to quarterly results.
Stock Performance: Sustained Underperformance Across Timeframes
Alkyl Amines' stock performance has been disappointing across most relevant timeframes, with the share price failing to keep pace with broader market indices. Over the past year, the stock has declined 7.71% compared to the Sensex's gain of 8.53%, resulting in negative alpha of -16.24 percentage points. The underperformance versus the specialty chemicals sector, which returned 8.05% over the year, amounts to -15.76 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +3.66% | +2.34% | +1.32% |
| 1 Month | +0.76% | -2.32% | +3.08% |
| 3 Months | -14.55% | -0.25% | -14.30% |
| 6 Months | -31.04% | +3.93% | -34.97% |
| YTD | +1.31% | -1.70% | +3.01% |
| 1 Year | -7.71% | +8.53% | -16.24% |
| 2 Years | -30.03% | +16.21% | -46.24% |
| 3 Years | -38.80% | +37.68% | -76.48% |
The medium-term picture is even more concerning, with the stock down 30.03% over two years and 38.80% over three years, massively underperforming the Sensex which gained 16.21% and 37.68% respectively over those periods. The six-month decline of 31.04% against the Sensex's 3.93% gain highlights the accelerating deterioration in investor sentiment.
The stock exhibits high volatility with a beta of 1.10, indicating it is more volatile than the broader market. The risk-adjusted return of -0.25 over one year, combined with 31.09% volatility, places the stock in the "medium risk, low return" category—an unfavourable combination for investors. The stock currently trades below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), a bearish technical signal.
Investment Thesis: Quality Company Facing Cyclical Headwinds
The investment case for Alkyl Amines rests on several pillars, though the recent quarterly performance has significantly weakened the near-term outlook. The company maintains "Good" quality status based on its strong balance sheet, minimal debt, and historically robust profitability metrics. The average ROCE of 30.25% and average ROE of 19.46% demonstrate the company's ability to generate attractive returns during favourable market conditions.
However, the confluence of negative factors—deteriorating financial trend, bearish technical indicators, expensive valuation, and weak quarterly results—creates a challenging environment for investors. The proprietary Mojo score of 28 out of 100, placing the stock in "Strong Sell" territory, reflects these multiple headwinds converging simultaneously.
Key Strengths & Risk Factors
Key Strengths
- Debt-Free Balance Sheet: Net debt-to-equity of -0.11 provides financial flexibility and reduces solvency risk during downturns.
- Strong Historical ROCE: Average ROCE of 30.25% demonstrates efficient capital deployment and competitive advantages in core business.
- Stable Promoter Holding: 72.03% promoter stake with zero pledging indicates strong management commitment and alignment.
- Exceptional Interest Coverage: 100x average EBIT-to-interest coverage eliminates financial distress concerns.
- Niche Market Position: Specialised amines and derivatives manufacturing creates entry barriers and customer stickiness.
- Manufacturing Infrastructure: Three strategically located facilities and dedicated R&D centre support technical capabilities.
- Quality Grade Maintained: Despite recent challenges, company retains "Good" quality status based on long-term fundamentals.
Key Concerns
- Severe Profit Decline: Q3 FY26 net profit crashed 68.13% quarter-on-quarter to ₹42.19 crores, raising sustainability concerns.
- Revenue Contraction: Quarterly sales of ₹354.00 crores mark the lowest level in recent periods, indicating demand weakness.
- Margin Compression: Operating margins have deteriorated substantially with PBDIT excluding other income at quarterly lows.
- Expensive Valuation: P/E of 43.78x and PEG ratio of 5.29 appear unjustified given negative earnings momentum.
- Negative EBIT Growth: Five-year EBIT growth of -5.57% reveals persistent profitability challenges beyond cyclical factors.
- Bearish Technical Trend: Stock trading below all major moving averages with deteriorating momentum indicators.
- Low Institutional Holding: Only 6.46% institutional ownership limits professional investor support and research coverage.
- Sustained Underperformance: Stock down 38.80% over three years versus Sensex gain of 37.68%, massive -76.48% alpha.
Outlook: What to Watch
Positive Catalysts
- Sequential revenue recovery in Q4 FY26 demonstrating demand stabilisation
- Margin improvement through cost optimisation or favourable raw material pricing
- New product launches or capacity expansions driving growth
- Increased institutional investor participation boosting liquidity
- Management commentary providing clarity on turnaround timeline
Red Flags
- Further revenue decline in upcoming quarters indicating structural demand issues
- Continued margin compression suggesting pricing power erosion
- Deteriorating working capital metrics or cash flow generation
- Market share losses to competitors in key product segments
- Inability to restore profitability to historical levels within 2-3 quarters
The path forward for Alkyl Amines depends critically on management's ability to arrest the margin decline and restore revenue growth. Investors should closely monitor the Q4 FY26 results for signs of stabilisation. Any sustained recovery in operating margins towards the historical 25-26% range would signal improving competitive positioning. Conversely, continued deterioration would validate concerns about structural challenges in the business model.
The Verdict: Exit Recommended on Weak Fundamentals
Score: 28/100
For Fresh Investors: Avoid initiating positions at current levels. The confluence of expensive valuation (P/E 43.78x), negative financial trend, bearish technicals, and sharp Q3 earnings decline creates an unfavourable risk-reward profile. Wait for clear signs of operational recovery and valuation correction before considering entry.
For Existing Holders: Consider exiting positions to protect capital. The 68% quarter-on-quarter profit decline, combined with quarterly revenue and margin lows, suggests deeper operational issues than temporary cyclical weakness. The stock's premium valuation provides limited downside support, whilst the bearish technical trend indicates further price erosion likely.
Fair Value Estimate: ₹1,250-1,350 (23-16% downside from current price of ₹1,615), based on normalised P/E of 28-30x applied to sustainable earnings power, factoring in current operational challenges and sector valuations.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
