Shares of Acutaas Chemicals Ltd surged by 7% in Thursday's trading session following an upgrade from JM Financial. The brokerage resumed coverage with a 'Buy' rating, up from its previous 'Add', and set a price target of Rs 3,800, indicating a potential 17% upside for the multibagger stock.
JM Financial's optimistic outlook for Acutaas Chemicals is driven by several key factors, including expected sustained earnings growth from its Contract Development and Manufacturing Organization (CDMO) business, which is projected to grow by a robust 28% compounded annually between FY26 and FY30.
Strategic Portfolio Shift Underway
Acutaas Chemicals is actively transitioning its specialty chemicals portfolio. The company is moving away from traditional base products like methyl paraben and salicylic acid to focus on higher-growth, high-value applications. This strategic shift includes a strong emphasis on electrolyte additives, semiconductor chemicals, and electronic chemicals.
According to JM Financial, the global market for electrolyte additives could reach 150,000 metric tons per annum by calendar year 2030. Acutaas has already secured contracts for its VC/FEC capacities and, with two additional additives, anticipates generating Rs 400 crore in revenue from this segment by FY30. In the semiconductor space, its BFC and Indichem offerings provide exposure to high-margin photoresist chemicals, with revenue expected to increase as its Korean facility ramps up operations.
Despite the gradual phasing out of lower-margin specialty chemicals, JM Financial projects the overall segment revenue to climb from Rs 170 crore in FY26 to Rs 730 crore by FY30, representing a 45% CAGR, largely propelled by the better margin profile of electrolyte additives and semiconductor chemicals.
Growth in CDMO and Legacy Pharma
The company's CDMO segment is also poised for significant expansion. JM Financial highlighted that Acutaas has four new CDMO molecules in its portfolio, spanning cardiovascular and oncology therapeutic areas. Each of these molecules has a revenue potential of Rs 50-100 crore, with total revenue from these four molecules expected to scale up to Rs 320 crore by FY30.
Furthermore, the legacy pharma intermediates business is set for recovery. With Pfizer’s Apixaban expected to go off-patent in November 2026, JM Financial estimates an addressable opportunity of Rs 440 crore for Acutaas, assuming Pfizer retains a 20% market share. This portfolio rejig and the anticipated sales of Apixaban intermediates are expected to drive the legacy pharma business to grow at a 12% CAGR over FY26–30, reaching Rs 880 crore.