Acutaas Chemicals has delivered close to 6x returns since its IPO in 2021, supported by a 31 per cent revenue CAGR and 45 per cent EPS CAGR over FY21-26. On the product front, the company has expanded beyond its core advanced pharma intermediates business into CDMO contracts, battery chemicals (BC), and semiconductor chemicals (SC). This improved product mix also helped drive a 1,200 bps expansion in EBITDA margins over FY21-26 to 34 per cent in FY26.

Over the next few years, the company is expected to sustain a similar pace of revenue growth while maintaining its margin profile. However, with the stock trading at 55 times one-year forward earnings versus its five-year average of 40 times, the valuation premium is steep. Even so, we recommend that investors hold the stock. Among the three new verticals, CDMO is already in the growth phase, BC is in the launch phase, and SC in the build-out phase, together providing a long growth runway for the company.

Advanced Intermediates

Advanced Intermediates accounted for 87 per cent of FY26 revenues and reported 44 per cent CAGR revenue growth in FY24-26 essentially driving the company growth, as shown in the figure.

Even within the segment, CDMO operations (unspecified revenue proportion) has been the primary growth driver. The company has built a dedicated facility for the supplies of intermediates to an anti-cancer drug (darolutamide, a prostate cancer drug) of Bayer & Orion, which has led to rapid growth in the division along with margin improvement of the company. Further growth from this molecule will depend on the CDMO agreement, but with the end-product reporting robust growth, the scope for Acutaas’ intermediate sales growth should be strong.

The CDMO division has validated four more products and should see growth ramping up in FY27. The four products have a peak potential of ₹50–100 crores each, which can be reached in FY27-28 period (FY26 consolidated revenues are ₹1,340 crore). Similar to the anti-cancer drug, these four products are also expected to benefit from stable and visible sales growth, serving a growing product. The CDMO division is developing a pipeline of products, some of which are in validation phase as well, ensuring a continued growth of the segment beyond the first product.

Battery and Semiconductor Chemicals

The battery chemicals division is facing a strong demand from long-term customer contracts signed and a pipeline of products in development.

The first two products, Vinylene Carbonate (VC) and Fluoroethylene Carbonate (FEC), each with a capacity of 2,000 tonnes per annum, have started production in Q1FY27 and will gradually ramp up in the next two years. As mentioned, the production is backed by long-term contracts with companies in North America and South Korea. These two products are expected to generate around ₹300 crore per annum on peak utilisation of the capacity. The company also has a pipeline of products in development. Of this, a facility for the third product is being developed and should start generating revenue in FY27, and a fourth product is in the validation phase.

Acutaas is manufacturing semiconductor grade speciality chemicals through Baba Fine Chemicals and it is a 75-per cent JV ownership – Indichem with a Korean company. The company acquired Baba Fine Chemicals in April 2023 for around ₹70 crore for a 55-per cent stake. The target company manufactures speciality chemicals for semiconductors industry. Following the acquisition, Acutaas has widened both the product portfolio and geographic reach, driving revenue growth. In the JV with the Korean company, the facility being developed at a cost of ₹200 crore is expected to be closed this calendar year with revenues accumulating from FY28. With a conservative estimate of 1 times asset turnover ratio, the facility should generate around ₹200 crore at peak utilisation three years from now.

Financials

The company has guided to a 25 per cent YoY growth in FY27 while maintaining EBITDA margins. The four upcoming CDMO products, two battery chemical products and the Indichem semiconductor chemicals facility are expected to add 60 per cent of incremental revenues to the FY26 base in next three years. Growth from existing base, pharma advanced intermediaries and speciality chemicals is also expected to further aid growth as the company will be completing a portfolio reshuffle for higher margin products this year.

In the longer run, the company has reported strong flow of requests for CDMO business and is developing a pipeline of products in both battery and semiconductor chemicals. To aid such development, the company is looking to significantly increase its R&D facility housing pharma, agro, semiconductor, battery, and cosmetics chemicals in a multi-discipline facility. Land acquisition and cost of development is expected to be announced this year. With a net debt to EBITDA of -0.40 in March-26 (indicating cash in excess of debt), the company should be able to fund the R&D and its expansion plans . 

Published on September 12, 2026