Privi Speciality Chemicals Gets Motilal Oswal's 'Buy' As It Initiates Coverage; Sees 30% Upside Potential

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Motilal Oswal Report

Over the last three years, Privi Speciality Chemicals Ltd. rerated from ~31.6x P/E (average of the last three years; one-year forward) to ~35.5x as of Nov’25, fueled by strong cash flow generation (Rs 2.8 billion in FY25), consistent performance (24% PAT CAGR over FY22-25), and improved RoE (18% in FY25).

The company has reported a CAGR of 14%/32%/24% in revenue /Ebitda /adjusted PAT over FY22-25.

We expect Privi to deliver a CAGR of 27%/34%/46% in revenue/Ebitda/adjusted PAT over FY25 to FY28.

Privi currently trades at 39x/32X/22x FY26E/FY27E/FY28E EPS with ROE/ROCE of 25%/18% in FY28E.

We value Privi at 28x FY28E (~10% discount to three-year average) EPS of Rs 141 to arrive at our target price of Rs 3,960.

We initiate coverage with a Buy rating on the stock.

Privi is not only scaling up its core operations—through capacity additions, product diversification, and deeper engagement with existing customers—but also strategically entering the green chemistry domain. This move is aimed at strengthening its long-term growth trajectory, tapping into environmentally sustainable demand pockets and broadening its client base across end-use industries.

The aroma chemicals market continues to gain traction, supported by robust demand for home fragrances, consistent growth in cosmetics, personal care, bakery, and confectionery segments amid rising consumer focus on safety and ingredient transparency, and a steady increase in disposable incomes in key emerging economies.

Further, given the diverse applications of green chemistry products, company is expected to address a larger wallet share from its existing customers (TAM of new products is ~$386 million), presenting a significant growth opportunity for Privi.

The merger with Privi Fine Sciences is expected to further strengthen the company’s long-term growth prospects.

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