The chemical industry, a $4 trillion global market, drives innovation and economic growth, producing over 70,000 diverse products. Employing millions worldwide, it underpins sectors like agriculture, pharmaceuticals, and manufacturing, with annual growth rates exceeding 3%. This dynamic industry transforms raw materials into essential everyday products.
With a market capitalization of Rs 7,612.98 crore, the shares of Archean Chemical Industries Ltd were trading at Rs 616.95 per share, decreasing around 0.04 percent as compared to the previous closing of Rs 617.20 apiece.
Looking into Archean Chemical Industries’s financial performance, revenue decreased by 26 percent from Rs 382 crore in Q3 FY23 to Rs 283 crore in Q3 FY24. During the same period, net profit decreased by 56 percent, from Rs 137 crore to Rs 60 crore.
Axis Securities, one of the well-known brokerages in India, gave a ‘Buy’ call on the chemical stock with a target price of Rs 865 apiece indicating a potential upside of 40 percent from Thursday’s closing price of Rs 616.95 per share.
Here is the rationale behind the bullish potential upside of 40%:
● Bromine Derivatives Expansion: The company is advancing its bromine derivatives project, having identified 8-9 new derivatives and begun testing and sampling. It has started exporting clear brine fluids through its subsidiary, Acume Chemicals Pvt. Ltd., and received sample approvals from over 10 clients. Expected revenue for FY25 is approximately Rs 200-300 crore, with anticipated volumes of 15,000-20,000.
● Capital Expenditure and Adjustments: The company has invested Rs 110 crore in Phase 1 of the bromine derivatives project, with plans to invest an additional Rs 30-40 crore. However, it has paused its Flame Retardants Capex due to the weak Chinese economy’s impact.
● Strong Order Book and Demand Growth: Archean has a robust order book for bromine in FY25, with increased supply and strong demand from end-user industries like Agrochem, especially with the monsoon season nearing, and gradually improving demand from the Pharma sector. The export market is also seeing steady shipments.
● Optimistic Volume Growth Despite Weak Prices: Despite weak bromine prices, Archean expects a 30% volume growth in FY25, with 10-12,000 units allocated for internal use in bromine derivatives, reflecting confidence in better business performance in the bromine segment.
Archean Chemical Industries Limited is an India-based specialty chemicals manufacturing company. The Company is engaged in activities related to the production and supply of marine chemicals. It is a producer and exporter of Bromine and Industrial Salt.
Written by:- Abhishek Singh
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