Acutaas Chemicals has transformed its business through a shift towards contract development and manufacturing organisation (CDMO) operations, helping drive revenue, profitability and return ratios over the past two financial years. The company is now expanding into semiconductor and battery chemicals, although these businesses are yet to make a material contribution to earnings.
The company's transition from manufacturing generic pharmaceutical intermediates to supplying innovator drug companies under long-term CDMO contracts has reshaped its earnings profile. It has also invested in research and manufacturing capacity to support future growth, while maintaining guidance for revenue expansion in FY27.
CDMO Business Becomes Main Growth Driver
Acutaas manufactures specialty and custom chemical products across advanced pharmaceutical intermediates (API), commodity chemicals and semiconductor chemicals. APIs remain its largest business, contributing 87.7% of revenue.
Revenue from the API segment increased to Rs 1,174 crore in FY26 from Rs 568 crore in FY24. The company manufactures complex intermediates up to the N-1 stage, with around 95% of its portfolio focused on chronic therapies. It serves more than 160 customers across over 25 countries and 17 therapeutic areas, while more than 90% of products are backward integrated to manage input costs.
The company has shifted from manufacturing generic intermediates to the CDMO model, under which it works with global pharmaceutical innovators to produce new chemical entities. Intellectual property is either jointly owned or held by the innovator, providing higher margins and longer-term revenue visibility than generic products.
A key contributor to this expansion is a 10-year supply agreement for the Fermion project. The end customer, Bayer, expects demand for the product to grow by 50% by 2026, positioning Acutaas to benefit as the primary supplier.
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Margin Expansion Lifts Financial Performance
The move towards higher-value CDMO products has improved profitability.
Revenue increased to Rs 1,339 crore in FY26 from Rs 718 crore in FY24, while EBITDA rose to Rs 480 crore from Rs 129 crore over the same period. EBITDA margin expanded to 35.9% from 17.9%, and the company expects margins to remain at similar levels in FY27. Profit after tax increased to Rs 356.4 crore from Rs 80.8 crore, while PAT margin improved to 26.6% from 11.3%.
Return on capital employed rose to 39.3% from 11.4%, while return on equity increased to 32.5% from 15.1%.
Management has guided for 25% revenue growth in FY27, supported by an expanding CDMO portfolio. The company has commercialised four additional CDMO products that are awaiting regulatory approvals. Management estimates each product could generate peak annual revenue of Rs 50 crore to Rs 100 crore, with contributions expected from FY27. It aims to achieve Rs 1,000 crore in CDMO revenue by FY28.
To support this pipeline, Acutaas is expanding its research and development centre tenfold and investing Rs 25 crore in a pilot plant for highly potent active pharmaceutical ingredients.
Semiconductor Chemicals Expand Beyond Domestic Market
The company is also building its semiconductor chemicals business.
This segment generated Rs 15.7 crore in revenue in FY26. Acutaas says it is the only Indian manufacturer of photoresist chemicals and currently serves more than five customers across four countries.
The business operates through two subsidiaries. Acutaas owns a 55% stake in Baba Fine Chemicals, which manufactures photoresist chemicals in Greater Noida. After weaker performance during the first nine months of FY26, the subsidiary recovered in the fourth quarter. Management expects the momentum to continue into FY27 and has begun shipments to customers in Japan and South Korea.
Acutaas has also formed Indichem Inc., a joint venture with South Korea's J & Materials, in which it holds a 75% stake after investing Rs 200 crore. The investment will fund a specialised manufacturing facility in South Korea with capacity of 1.8 KL. Management expects the plant to generate peak revenue equivalent to the amount invested. Construction is expected to finish in the second half of calendar year 2026, while the research and development centre has already started sending samples to potential customers.
Battery Chemicals Move Towards Commercial Production
Acutaas is developing battery electrolyte additives for lithium-ion, sodium-ion and solid-state batteries.
Two products-vinylene carbonate and fluoroethylene carbonate-have already been commercialised. The company plans to commercialise two additional products during FY27. Capital expenditure on a third electrolyte additive product is expected to finish in the first quarter of FY27, after which it will begin contributing revenue, while a fourth product remains under development.
Its battery chemicals facility has installed capacity of 2,000 metric tonnes per annum each for vinylene carbonate and fluoroethylene carbonate. The first phase has been completed, while the second phase is scheduled for completion in the first quarter of FY27.
The company said all newly created capacity has been backed by long-term supply agreements covering the next three years, providing revenue visibility. Its electrolyte additives have also received approval from more than five customers across three countries.
Valuation Reflects Execution Expectations
Acutaas' transition to the CDMO model has improved earnings, margins and return ratios, while semiconductor and battery chemicals provide additional growth opportunities.
However, these newer businesses have yet to make a meaningful contribution to earnings. Following the stock's re-rating to 76 times FY26 earnings, future performance is expected to depend on the company's ability to execute its expansion plans.
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