Acutaas Chemicals targets battery chemicals ramp-up amid strong pharma growth

Investment View

SBICAP Securities Limited's August 27, 2026 report maintains a positive view on Acutaas Chemicals Ltd., supported by the company's transition towards higher-value specialty applications while retaining Pharma Intermediates as its core earnings and profitability contributor.

Acutaas Chemicals is a research and development-driven specialty-chemicals manufacturer producing Advanced Pharmaceutical Intermediates and Active Pharmaceutical Ingredients for New Chemical Entities, along with materials for agrochemicals and fine chemicals. The company has also expanded into battery chemicals and is developing semiconductor and electronic-grade chemicals.

Pharma Intermediates Remains the Core Growth Engine

The broker's positive view is anchored in continued momentum in the Pharma Intermediates business. Acutaas Chemicals' CDMO business is seeing broad-based growth across products, reducing product concentration. Growth is being supported by established and new product categories as well as contract-manufacturing opportunities, while the in-house research and development team supports the pipeline.

In 1QFY27, revenue, EBITDA and PAT increased by 59 per cent, 122 per cent and 68 per cent year-on-year, respectively, led by strong growth in Pharma Intermediates.

Specialty Chemicals: Increasing Value Addition

Acutaas Chemicals is deliberately reducing its exposure to commoditised products and raising value addition through specialty products. Strong growth at Baba Fine Chemicals is helping offset the planned phase-out of the commoditised portfolio.

The company is also redirecting manufacturing capacity towards new specialty products, including battery and semiconductor chemicals.

New Growth Opportunities

Battery Chemicals

Battery chemicals are identified as a new growth driver. Trial runs at the battery-chemicals plant have been completed, and commercial supplies started in 1QFY27. Production is expected to ramp up gradually from 2QFY27, with customer contracts already in place.

The report cites strong demand from electric vehicles and energy storage, as well as tight global supply conditions. Acutaas Chemicals is confident that existing customer contracts can support a sharp increase in capacity utilisation.

Semiconductor and Electronic-Grade Chemicals

Semiconductor-related investments remain strategically relevant, with customer interactions described as encouraging. The report states that this business could scale significantly after commercialisation, supported by structural semiconductor-chip demand, particularly from artificial-intelligence-related applications.

Valuation and Recommendation

At the report CMP of Rs 3,317, Acutaas Chemicals traded at 59.7 times FY27E and 45.0 times FY28E Bloomberg consensus earnings. SBICAP Securities has a BUY recommendation and a 12-month target price of Rs 3,815, implying 15.0 per cent potential upside.

The report does not state a separate valuation methodology for the target price.

Financial Projections

The projections indicate that EBITDA margins are expected to remain broadly stable through FY29E, despite the company's shift towards higher-value specialty applications.

Key Risks

• Volatile raw-material and freight costs.
• A delay in ramping up battery-chemical facilities.