Archean Chemical Industries Ltd. share price target

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.

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.

We maintain our BUY rating on the stock

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.

Archean Chemical’s Q3FY23 EBITDA grew 36% YoY to Rs1.6bn, a tad lower than our expectation due to lower bromine volumes, which indeed were hurt from lower off-take by Chinese. It was compensated by higher industrial salt volumes and improved realisations for both bromine and industrial salts.

Incorporated in 2009, Archean Chemical is a leading specialty marine chemical manufacturer in India and focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers around the world. Company is the largest exporter of bromine and industrial salt by volume in India in Fiscal 2021. Its marine chemicals business is predominately

Issue Snapshot: Issue Open: Nov 09 Nov 11, 2022 Price Band: Rs. 386 407 *Issue Size: 35,928,870 eq sh (Fresh issue of Rs 805 cr + Offer for sale of 16150000 eq sh) Reservation for: QIB atleast 75% eq sh Non-Institutional upto 15% eq sh ((including 1/3rd for applications between Rs.2 lakhs to Rs.10 lakhs)) Retail upto 10% eq sh Face Value: Rs 2 Book value: Rs 33.45 (June 30, 2022) Bid size: - 36 equity shares and in multiples thereof 100% Book built Issue IPO Note-Archean Chemical Industries Limited

IPO NOTE