Balaji Amines Final - ANS Pvt. Ltd.

Risk FactorsUnrealistic Diversification: Our major concern about the company is itsunrelated diversification of business. It has recently got approval from itsboard to venture into constructing, developing and to lease out property forHotel business in Sholapur. We believe such diversification of businessinto a NON RELATED SECTOR can affect company’s reputation, operations& Financial Heath.High Leverages: Although the Company requires additional Fund for itsdevelopments but it has keep a control over its Debt/Equity Ratio. However,BAL has succeeded in gradually reducing D/E Ratio in last Four Years.Systematic & General Risks: These include a general downturn in marketdemand conditions, escalation in raw material prices and changes inregulatory frameworks.RecommendationsWe expect that the company will continue a Net Sales growth ofCAGR 20% for FY10E-FY11E. In view of this we Recommend a BUYON DECLINE rating on the stock with a target price of Rs. 203denoting a multiple of 7x of FY10E forward earnings and Rs. 280denoting a multiple of 8x of FY 11E forward earnings.