ACUTAAS - Acutaas Chemical

📊 NSE: ACUTAAS 🏢 Pharmaceuticals 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

The Pharmaceutical Intermediates segment grew 50% YoY to INR 854 Cr in FY25, while the Specialty Chemicals segment grew 2.2% YoY to INR 152.9 Cr. Total revenue for Q2 FY26 reached INR 306.2 Cr, representing a 24.1% YoY growth, and H1 FY26 revenue reached INR 513.4 Cr, a 21% increase.

Geographic Revenue Split

In FY25, exports accounted for 74% of total revenue, while the domestic business contributed 26%. The company has a widespread geographical presence across more than 55 countries.

Profitability Margins

Gross margin for Q2 FY26 was 55.8%, an expansion of 1,232 basis points YoY. PAT margin for Q2 FY26 was 23.5%, expanding by 824 basis points. FY25 PBILDT margin was 23.51%, up from 18.39% in FY24, driven by a shift in sales mix toward higher-margin products.

EBITDA Margin

EBITDA margin for Q2 FY26 was 31.1%, up 1,130 basis points YoY. The company has provided a guidance of 28% to 30% for FY26, driven by higher CDMO contribution and operational efficiencies.

Capital Expenditure

Gross Cash Accruals (GCA) doubled to INR 193.59 Cr in FY25 from INR 100.70 Cr in FY24, supporting internal funding of projects. Block 3 was commissioned in Q4 FY24 and is now operational to meet customer requirements.

Credit Rating & Borrowing

The company holds a CARE A+; Stable / CARE A1+ rating as of December 2025. Interest coverage is exceptionally strong at 119.86x for H1 FY26, with an overall gearing ratio of 0.01x as of September 30, 2025.

⚙️ Operational Drivers

Raw Materials

Key Starting Materials (KSM) and specific chemicals like VC and FEC for the electrolyte business; raw material costs represent approximately 72% of the total cost of sales.

Import Sources

Approximately 71% of raw materials are sourced domestically from India, while 21% are imported from China to ensure supply chain resilience.

Capacity Expansion

Block 3 was commissioned in Q4 FY24 for dedicated contracts. The company also operates a 6MW captive solar plant to drive energy efficiency. Electrolyte additive commercial operations have commenced with a ramp-up expected from FY26.

Raw Material Costs

Raw material costs account for 72% of total cost of sales. The company manages volatility by revising export prices quarterly based on KSM prices and using spot pricing for domestic sales.

Manufacturing Efficiency

The company is transitioning to Flow Chemistry to reduce solvent consumption and improve input-output efficiency. Operating leverage contributed to the 1,130 bps expansion in EBITDA margins in Q2 FY26.

📈 Strategic Growth

Expected Growth Rate

25%

Growth Strategy

Growth will be achieved through the ramp-up of the CDMO business, which saw sharp growth in Q2 FY26, and the commercialization of semiconductor chemicals through Baba Fine Chemicals. The company is also churning out low-margin products from its core pharma portfolio to improve margins while maintaining a 25% revenue growth target. New verticals like electrolyte additives are expected to contribute significantly from FY26 onwards.

Products & Services

Advanced pharmaceutical intermediates for regulated and generic APIs, New Chemical Entities (NCE), photo-resistant specialty chemicals, and electrolyte additives for batteries.

Brand Portfolio

Acutaas Chemicals (formerly Ami Organics), Baba Fine Chemicals, Indichem (Korea), and Acutaas Advance Material Limited.

New Products/Services

Semiconductor chemicals and electrolyte additives for batteries; electrolyte business has firm orders in hand for FY26 ramp-up.

Market Expansion

Expanding Baba Fine Chemicals into new geographies and diversifying the international footprint across 55+ countries to mitigate regional economic slowdowns.

Strategic Alliances

Acquisition of a non-controlling stake in Indichem (Korea) and the acquisition of Baba Fine Chemicals (now Acutaas Advance Material Limited).

🌍 External Factors

Industry Trends

The specialty chemicals industry is evolving toward sustainable processes like Flow Chemistry. Acutaas is positioning itself as a diversified player across pharma, semiconductors, and battery chemicals to capture a 31% historical CAGR trend.

Competitive Landscape

Faces intensifying competition in specialty chemicals which can affect pricing; responds through product differentiation and cost leadership.

Competitive Moat

Moat is built on R&D capabilities, a portfolio of 610+ products, and high switching costs for customers in the regulated pharma space. This is sustainable due to the long-term nature of CDMO contracts and stringent regulatory approvals.

Macro Economic Sensitivity

Sensitive to global pharmaceutical demand and semiconductor industry cycles; revenue is highly dependent on the 74% export market.

Consumer Behavior

Shift toward energy-efficient and environmentally friendly chemical processes is driving the adoption of Flow Chemistry.

Geopolitical Risks

Ongoing tensions could disrupt the 21% of raw materials sourced from China or impact the 74% export revenue across 55 countries.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to strict regulatory standards for pharmaceutical intermediates and EHS protocols. Non-compliance could lead to operational disruptions.

Environmental Compliance

The company must adhere to stringent EHS regulations; it has invested in a 6MW solar plant and Flow Chemistry to meet environmental standards.

Taxation Policy Impact

Current tax provision for FY25 was INR 49.19 Cr on a consolidated basis.

⚠️ Risk Analysis

Key Uncertainties

Execution risk of ongoing projects and potential miscalculation of market demand for new verticals like semiconductors could impact profitability by 5-10%.