Archean Chemical Industries Ltd. share price target

Archean chemical revenue for Q4FY25 stood at INR 3,456 Mn, up 21.7% YoY (+42.6% QoQ), above our estimates by 19.5%, led by sharp recovery in industrial salt volumes following the resolution of logistics issues.
EBITDA came in at INR 883 Mn., up 1.3% YoY (+10.4% QoQ). EBITDA missed our estimates by 8.7% despite sharp recovery in revenue, driven by higher-than-anticipated other expenses offset by higher gross profit.

We change our rating on the stock from BUY to HOLD.

In our view, ACI has a plethora of opportunities – each carrying strong value creation potential – along its path ahead. Right off the bat, the expansion in bromine derivatives, and thus, higher captive bromine consumption would likely provide a strong fillip to ACI’s bromine business.

Archean chemical missed our estimates on all front as volume pick-up continues to lag. The PAT declined during the quarter by 53% YoY but there was 7% growth in EBITDA on sequential basis aided by improvement in margin.

We change our rating on the stock from HOLD to BUY.

We change our rating on the stock from BUY to HOLD owing to expected delays in recovery due to prolonged weakness in the market.

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.

ACI is investing GBP 15 million for a 21.33% stake in Clas-SiC Wafer Fab Limited, a UK-based Silicon Carbide (SiC) wafer foundary specializing in SiC MOSFETs and diodes. This investment secures technology exclusivity in India, enabling Archean to integrate its specialty chemicals
expertise into SiC semiconductor business, achieving cost efficiencies and a streamlined supply chain to meet growing demand in high-growth markets like EVs and renewable energy.

Archean chemical reported lower than expected revenue and profits in Q1FY25. It recorded 25% fall in revenue on sequential basis largely due to loss of two weeks in the shipment movement during the quarter as the company shifted its logistics from Jakhau to Mundra as a regular practice during monsoon and it led to lower volume offtake in the quarter due to shipment challenges.

We maintain our BUY rating on the stock

Archean Chemical Industries (ACI) is set to amplify its product offerings by incorporating bromine derivatives. Leveraging its existing bromine production capabilities, this strategic move
aims to create a more specialized product portfolio.

We value the stock at 13x FY26E EPS with a target price of Rs 865/share, implying an upside of 39% from the CMP.

We recommend a BUY on the stock for a target price of Rs 693/ implying an upside of 12% from CMP.

We maintain our BUY rating on the stock as we roll forward our estimates to Sep'26E numbers with a revised target price of 885/share, implying a 43% upside from CMP.

Archean Chemical’s (ACI) Q2FY24 EBITDA dipped 19.5% YoY to INR 955mn due to lower revenue in bromine business, while industrial salt revenue grew 57.1% YoY. EBITDA margin has been severely impacted by lower bromine revenue mix which has much higher margins.

Bromine prices have dropped below 15-year low in China in Jun’23, but it has partly recovered in Aug’23. The price fall was a mix of greed, speculation and sudden drop in demand. China is undergoing destocking which may last till end-CY23 as per ICL.

Archean Chemical’s (ACI) Q1FY24 EBITDA dipped 16.3% YoY to INR 1.3bn due to lower volumes and prices for bromine (revenue dipped 33% YoY), while industrial salt revenue was steady, grew 3.2%. SOP shipment has also been pushed to the remaining quarters of FY24.

Archean Chemical’s (ACI) Q4FY23 EBITDA grew 21.5% YoY to Rs1.9bn due to robust pricing in bromine and salt segments. Company is seeing pressure on bromine export volumes and realisations, which is expected to improve only in the next two quarters.