Buy Archean Chemical Industries; target of Rs 890: KR Choksey

KR Choksey is bullish on Archean Chemical Industries has recommended buy rating on the stock with a target price of Rs 890 in its research report dated November 13, 2024.

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November 14, 2024 / 16:52 IST

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26 Aug, 2025 12:21

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KR Choksey's research report on Archean Chemical Industries

Archean chemical reported lower than expected revenue and earnings in Q2FY25 largely on account of lower volume in Industrial salt. The revenue and PAT (including exceptional item) for the company declined in Q2FY25 by -17%/-74% on YoY basis. The fall in PAT was sharply on account of inventory loss of industrial salt worth of INR 402 Mn (4.72 Lakh MTPA). However, the adjusted PAT also declined -15% during the quarter on account of lower volume offtake and reduced profitability. ACI's strategic investment in silicon carbide and zinc bromide battery technologies highlights the company's forward-looking vision and reflects a paradigm shift in its business dynamics. In light of the recent performance, we have revised our FY25E and FY26E earnings estimates downward by 21% and 10%, respectively, due to softer demand in the export market for bromine and weaker volume offtake in industrial salt. However, we recognize the potential in ACI’s bromine derivatives business, which is expected to contribute meaningfully from H2FY25 onwards, positioning the company towards a more specialty and value-added product portfolio.

Outlook

Reflecting this shift, we have upgraded our forward P/E multiple by 5%, from 19x to 20x. We now value the stock on a revised FY26E EPS of INR 45 (previously INR 50), setting a target price of INR 890 (previously INR 943), indicating a potential upside of 32.6% from the CMP.

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