AMIORG - Ami Organics Limited Share Price

Management Outlook:
Ami Organics anticipates robust growth, revising FY25 revenue guidance upward to 35% YoY (from 30%) driven by strong CDMO performance and advanced pharmaceutical intermediates. The CDMO pipeline is expected to fuel long-term growth, targeting INR 1,000 crore in CDMO revenue by FY28 (vs. INR 80"“90 crore in FY24). The global chemical industry faces continued soft demand and low raw material prices in H1 CY25.

Key Highlights:

1. CDMO Momentum: Ramp-up in Q3 with multiple projects nearing commercialization (expected by FY26). New Ankleshwar facility (Blocks 1-3) positions the company to capture India's CDMO growth.
2. Margins Expansion: Gross margin rose 333 bps YoY to 46.2% in Q3, driven by product mix and operational leverage. EBITDA margin reached 25% (up 904 bps YoY), with further improvement expected as CDMO scales.
3. Specialty Chemicals: BFC segment bottomed in Q2; steady recovery expected. Commodity chemicals remain pressured.
4. Future Growth Areas:
   • Battery Chemicals: Long-term contracts for electrolyte additives (12+ products); CAPEX on track (H1 FY26).
   • Semiconductors: Promising engagements in Japan/Korea; high-margin potential (40"“65% margins).
5. Capacity Utilization: Pharma intermediates at 50"“70% utilization; ample room for growth with Ankleshwar expansion.
6. Financial Strength: Net cash of INR 306 crore; working capital reduced to 95 days.

Cautious Optimism: Near-term delays in battery/semiconductor demand but strategic investments align with long-term opportunities. Focus on innovation, cost efficiency, and client diversification sustains resilience.

Question 1: "After all the efforts, finally, things seem to be settling in a right direction. I just wanted to understand, we have good visibility as far as our Pharma Intermediate and CDMO business is concerned for the next 2 years. But what are the steps we are taking to build growth engine intake after 2027?"
Answer: Ami Organics' business model ensures revenue security until 2040 through generic molecule development. Future growth will be driven by CDMO/CMO projects (including advanced-stage clinical molecules) and diversification into semiconductor chemicals and electrolyte additives. The company has a robust pipeline of CDMO projects in late-stage trials and plans to leverage new facilities (e.g., Ankleshwar) for scalability.

Question 2: "On the margin front, I believe on account of higher CDMO contribution, EBITDA margins have jumped to almost like 25%. Do you think that with further ramp-up of CDMO business and solar power benefit, your margins could reach 26%, 27%?"
Answer: Margins are expected to improve sequentially due to higher CDMO contributions, operational efficiency from new facilities, and favorable product mix. The company targets surpassing its previous peak EBITDA margin (23.5%) and believes margins can sustainably reach 27"“30% as CDMO scales, though conservatively guided due to industry benchmarks.

Question 3: "How is the demand visibility from apixaban and rivaroxaban intermediates?"
Answer: Apixaban demand is rising ahead of its 2026 patent expiry, with Q3 sales beginning to ramp up and further growth expected in Q4 and FY26. Rivaroxaban (patent expiry FY26/27) is seeing steady orders from European and Indian partners, with incremental growth anticipated toward FY26.

Question 4: "Today, what is the capacity utilization, and do we have capacities in place to cater to the growth targets (e.g., INR 1,000 crores CDMO revenue by FY28)?"
Answer: Current capacity utilization: ~70% at Sachin Unit-1, ~50% at Ankleshwar Units 2 and 3. New blocks (Ankleshwar) will be operational by March 2025, supporting growth. Existing infrastructure and planned electrolyte additive facilities (H1 FY26) are sufficient for 2"“3 years. Land reserves are available for future expansions.

Question 5: "Are the CDMO pipeline projects related to existing patented products scaling up or new molecules in development?"
Answer: The pipeline includes both existing and new CDMO projects, with molecules in Phase II/III trials and approval stages. Success in current projects (e.g., darolutamide) has boosted client confidence, leading to more opportunities. Revenue visibility extends to FY28"“29, driven by clinical-stage molecules.

Question 6: "What is the revenue potential and margin outlook for battery chemicals and semiconductor segments?"
Answer: Electrolyte additives (4,000 MT capacity) will see margins "better than Specialty Chemicals but lower than Pharma." Semiconductor chemicals (high-purity photoresists/monomers) have margins of 40"“65%, with validation underway in Japan/Korea. Both segments are long-term drivers but will scale meaningfully from FY27 onward.

Question 7: "Why retain the Specialty Chemicals segment amid headwinds?"
Answer: Specialty Chemicals provides diversification, mitigates sector-specific risks, and maintains double-digit margins despite commoditization. The company is pursuing regulatory approvals for new products to revive growth, expecting a rebound from FY26.

Question 8: "What is the export/domestic revenue split, and how is European demand?"
Answer: Exports account for 76% of revenue. European demand remains stable, with contracts and rolling forecasts ensuring visibility. The revised 35% FY25 growth guidance reflects confidence in global demand, particularly for CDMO and pharma intermediates.

Question 9: "How are AI and technology being utilized in operations?"
Answer: AI is deployed in equipment control and process optimization at new facilities, though specifics remain confidential. The focus is on enhancing operational efficiency and compliance in high-purity chemical production.

Question 10: "Can you clarify the revenue split between innovator vs. generic pharma segments?"
Answer: The company no longer discloses granular splits due to competitive sensitivity. However, CDMO (innovator-focused) revenue has doubled YoY and is projected to grow exponentially, driven by Ankleshwar's commercialization and a strong pipeline.