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Battery, Chemicals & CDMO to support long-term growth

Battery Chemicals

* The company manufactures electrolyte additives, with customers in North America and Korea having approved its products.

* 3rd and 4th battery chemical products are expected to be commercialised in the next few quarters.

* VC and FEC capacity of 4,000 MTPA is expected to ramp up over the next three years. Management indicated that demand is higher than the planned capacity addition and expects demand to support full utilisation once the capacity is operational.

* The 3rd product is expected to achieve an asset turn of around 3x, implying peak revenue of ~Rs 1.2bn on capex of ~Rs 400mn.

* Margins for the battery chemical business are expected to remain in the 15–20% range.

* Product pricing is formula-based, with prices linked to fluctuations in raw material costs and INR movements.

* While VC prices have increased sharply, Acutaas’ realisations are through formulabased pricing. Current contracted realisations are below US$10/kg, compared with spot price of US$30/kg

Semiconductor

* The new building in South Korea has the ability to accommodate additional reactors, while additional land is also available for future expansion.

* Management expects the Korean plant to generate around Rs 2,000mn revenue over the next three years.

* Customer validation typically takes around 6–8 months.

* BFC manufactures photoresist intermediates, which will further processed into advanced intermediates in South Korea.

* BFC has revenue visibility of around Rs 1,000mn over the next three years.

Other Key Points

* No major pharma capex is planned over the next 1-2 years.

* The company intends to gradually reduce its dependence on the Gujarat Organics portfolio.

* Management's broader objective is to build multiple revenue streams and reduce dependence on any single business segment.

* H2 is expected to be stronger than H1 in FY27

Please refer disclaimer at Report
SEBI Registration number is INH000000933