Archean Chemicals Indsutries Ltd Quarterly Results Q4 FY 25 stock analysis

Home » Core Investor Group » Archean Chemicals Industries Ltd – Q4FY25 Result Update

Sector Outlook: Netural

Healthy operational performance; Strategic focus Intact

The company posted a revenue increase of 21.7% YoY / up 42.6% QoQ to Rs. 3,456 mn, above our expectations of Rs. 3,060 mn. This performance was driven by a recovery in volumes and improved execution across key segments. Bromine contributed one-third of the total revenue during FY25, reaffirming its position as a core growth driver. The company continues to maintain its leadership as India’s largest exporter and manufacturer of elemental bromine. Meanwhile, Industrial Salt accounted for nearly two-thirds of total sales and witnessed a sharp recovery in Q4, with volumes reaching 1.3 million tons for the quarter. Management expects the quarterly volume run rate to remain above 1 million tons, supported by long-term customer relationships and ongoing contractual agreements. EBITDA increased 1.3% YoY / up 10.4% QoQ to Rs. 883 mn, while EBITDA margin stood at 25.5% (down 514bps YoY) in Q4FY25, owing to a contraction in gross margins by 636bps YoY to 96.4%. The net profit stood at Rs. 537 mn (down 6.7% YoY / up 12.4% QoQ) in Q4FY25, above our expectations of Rs. 428 mn. The PAT margin was 15.6% versus 19.7% in the previous quarter. Overall, the company has maintained margins, expanded customer engagements, and advanced strategic initiatives in both the Bromine Derivatives’ business, Semiconductors, and the Energy Storage business. We thus believe, Archean remains optimistic about its long-term growth trajectory, focusing on operational efficiencies and strategic expansions.

Key Concall Highlights

Bromine Business:

The company’s bromine segment remains a strategic growth driver, contributing 1/3rd of FY25 revenue. The company has guided for a 20–25% YoY increase in bromine sales volumes to 22,000–25,000 tons in FY26, including captive consumption for derivatives. This growth is supported by strong demand across flame retardants, oil & gas, agrochemicals, and pharmaceuticals. Despite Q4FY25 production challenges, operations have improved, tracking above expectations. Archean is well-positioned for expansion with infrastructure and minimal capex needs. Stable global customer relationships, pricing flexibility in domestic markets, and rising bromine spot prices add to growth prospects. The ramp-up of the bromine derivatives plant will enhance margins and value capture. Archean’s marine-based bromine production and cost leadership reinforce its competitive edge for sustained growth.

Industrial Salt Business:

Archean Chemical maintains a strong position in the industrial salt market, contributing two-thirds of FY25 revenue driven by operational improvements, long-term contracts, and enhanced logistics infrastructure. Following a solid recovery in Q4FY25, the company expects to sustain a volume run rate above 1 million tons per quarter, translating to 4.5–5 million tons annually in FY26. The recent commissioning of a second washery and an owned logistics fleet has boosted capacity and mitigated supply chain risks. As India’s largest exporter, Archean benefits from a diversified global customer base, stable pricing, and tight cost control. Despite lower margins, scale and integration ensure healthy contribution margins, with long-term agreements providing revenue stability and cash flow consistency.

Sulphate of Potash:

The company continues to progress steadily in its SOP segment, which holds significant promise as a high-margin, value-added product in the specialty fertilizer space. The company has completed most of its trials at both the test and pilot phases and is now preparing to demonstrate SOP production at plant scale in the upcoming quarter.

Oren Hydrocarbon:

The company has made notable progress in reviving operations at Oren Hydrocarbons, the specialty oilfield chemical company it acquired in 2024. Two Andhra Pradesh units are ready for operations, while Gujarat and Tamil Nadu facilities will begin production in late FY26. The company has completed debottlenecking and refurbishment within its Rs. 25–30 crore budget and expects Rs. 150 crore in revenue from Oren Hydrocarbons in FY26. This move strengthens its specialty chemicals portfolio and long-term growth strategy.

Capex Plan:

The company has outlined a strategic Capex plan to expand its core chemical business and diversify into high-growth sectors. It has outlined a disciplined and focused capital expenditure (capex) plan for FY26 and beyond to support its strategic growth initiatives while maintaining financial stability.

Semiconductor Business:

The company has outlined a strategic Capex plan to expand its core chemical business and diversify into high-growth sectors. Archean Chemical has outlined a disciplined and focused capex) plan for FY26 and beyond, to support its strategic growth initiatives while maintaining financial stability.

Guidance

Despite ongoing global market challenges, Archean Chemical remains optimistic about its growth trajectory. The company expects double-digit revenue growth in FY26, driven by stabilization in its core bromine and industrial salt businesses and increasing contributions from bromine derivatives and new ventures.

Valuation and Outlook

Archean Chemical Industries Ltd has reported healthy financial performance in Q4FY25, with notable growth driven by volume recovery, favourable pricing, and cost efficiencies. The company continues to build on its position as a leading integrated marine chemicals player, aided by strong execution across its core segments, bromine and industrial salt. With bromine-guided volumes expected to grow 22,000–25,000 tons in FY26, the company is set to benefit from rising global demand, especially across flame retardants, pharma, agrochem, and oil & gas end-use sectors. Meanwhile, industrial salt is expected to maintain volume momentum with 4.5–5 million tons guided for FY26, aided by capacity enhancement, improved logistics, and sustained long-term contracts. Additionally, Strategic initiatives such as the sulphate of potash (SOP) plant, energy storage, and semiconductor foray further enhance long-term profitability. We forecast Revenue/EBITDA/PAT to grow at CAGRs of 7.6%/10.4%/6.1% from FY24 to FY26, driven by (1) a leading market position and ongoing expansion in bromine and industrial salt, (2) emphasis on capacity expansion and subsidiary operations, (3) expansion into new geographies, (4) and ramp-up in new businesses. Consequently, we expect Archean Chemical to generate substantial long-term revenue and note that it is currently trading at P/E ratios of 29.2x for FY26e and 19.1x for FY26e EPS estimates. We value the company at 22x FY26e EPS, arriving at a revised target price of Rs. 676 per share, which suggests an upside of 18%.