Archean Chemical Q1 Review - Logistic Issues Poses Challenge; Demand Scenario Remains Healthy: DRChoksey

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DRChoksey Research Report

Archean Chemical Industries Ltd. remains on track to launch its bromine derivative products such as Clear Brine Fluids, PTA Synthesis, and specialty products in the second half of fiscal year 2025 (H2 FY25).

Concurrently, the recent acquisition of Oren Hydrocarbon is expected to become operational from H2 FY25E, with management aiming to achieve revenue exceeding Rs 2,000 million from this business.

We believe the downward trend in bromine prices has been arrested and should continue to improve. The volume recovery in industrial salt, supported by fixed contracts with customers, is expected to offset the underperformance of the first quarter and contribute to healthy full-year growth.

As the contribution of non-commodity revenue increases in the second half of FY25E and throughout FY26E, there should be a probable re-rating case for this counter.

We maintain Buy rating with a projected 34%/44% revenue/net profit compound annual growth rate during FY24-FY26E, driven by volume recovery in existing products and uptake in new derivative products.

We maintain the target price of Rs 943 valuing the stock at a price/earning of 17.5 times on FY26E earnings per share.

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