Archean Chemical - Robust Long-Term Growth Outlook: Axis Securities Initiates Coverage With A 'Buy'

Axis Securities Report

Archean Chemical Industries Ltd. offers multiple moats which are expected to translate into key growth drivers going forward as the company slowly ramp-up its Bromine derivative capacity along with its traditional secured salt business and soon-to-be-revived sulphate of potash business.

We believe Archean Chemical is well placed in the bromination space given-

1. Strong industry growth drivers; increased usage of Bromine in agrochem and pharma chemistries,

2. forward integration into highvalue business with strong demand from the largest geographies in the world, and

3. well-nurtured long-term relationship with customers.

The stock currently trades at 10 times FY25E earnings per share.

We value the stock at 14 times FY25E EPS and initiate coverage with a 'Buy' rating on the stock with a target price of Rs 810/share, implying an upside of 33% from the current market price.

Key risks

• Emergence of non-halogenated flame retardant.

• Lease renewal risk.

• Operational risk.

• Volatility in raw material prices.

• Foreign exchange fluctuation risk.

• Client concentration risk.

• Environmental hazardous activity.

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