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Meghmani Organics Ltd (MOL) has established its operations in 1986, headquartered in Ahmedabad, Gujarat. It is a fully integrated chemicals company with a diversified presence across segments, such as Crop Protection, Crop Nutrition and Pigments.

Investments and Industry tailwinds to drive the future growth

i) In the Crop Protection segment, MOL commissioned its Multipurpose Plant (MPP) in 2023 to manufacture new age highvalue products. The management is targeting revenue of Rs. 1,000 cr by FY27/28E, from Rs. 250 cr in FY25. Additionally, 2,4-D, a key herbicide (capacity: 21,600 TPA), is expected to witness increased demand from US following the significant tariff (ADD+CVD) differential between India (17.7%) and China (126.58%) effective from May 2025. It contributes 15-20% of MOL’s total revenue. Historically, China and India together accounted for ~80% of total 2,4-D imports into the U.S, where Corteva is the sole domestic producer. It has created significant export opportunities for Indian players such as Meghmani Organics and Atul Ltd, with Meghmani enjoying a competitive edge due to lower effective duties of 9.5% versus 25.9% for Atul Ltd. ii) In the Crop Nutrition segment, significant growth is expected in Nano urea over the medium to long term, supported by a rising number of field demonstrations across India and growing export potential (working with 35-40 countries, started receiving trial orders from few markets). Its key advantage lies in replacing costlier conventional urea. However, adoption in the domestic market has been limited so far due to relatively lower price difference compared to subsidized conventional urea, lack of awareness amongst farmers, and the need for greater support and education on proper usage. Apart from this, MOL aims to add 2-3 products in Crop Nutrients segment by the end of FY26, which is expected to drive further growth. The management has guided for strong operating margins of 20% in this segment.

TiO? turnaround: From acquisition setbacks to margin-driven revival

In 2021, Meghmani acquired Kilburn Chemicals to diversify into the titanium dioxide (TiO?) segment. Following the acquisition, the business faced headwinds due to a global decline in TiO? prices, resulting in operational losses. The imposition of anti-dumping duties (ADDs) by India on Chinese TiO? ($460–$681/MT) has strengthened domestic industry fundamentals, supporting a recovery in business performance with projected margins of 15–20% over the next 2–3 years. The actual impact of ADD is expected from Q3FY26 onwards, where ~20-25% price increase is expected in the near term.

Muted growth to continue in its conventional pigment business

MOL has not invested in its conventional pigment business due to high cost of production vs small industry players made it difficult to run the business. It has indicated stable growth with high single digit margins for FY26E.

Valuation

Post sailing through the continued challenges over the last 2 years, Meghmani Organics is poised to deliver strong performance backed by key growth drivers such as overall increase in the demand for agrochemicals (Crop protection and crop nutrition), stability in chemical prices and expected revival in TiO2 margins. In Q4FY25, MOL has delivered resilient performance with ~35% growth in its topline and improved operating margins at 11.8% (vs Q4FY24: 0.5% & Q3FY25: 7.2%). The management is guiding for revenue growth of 15-20% range in FY26E with margins of 15-16% range in Crop protection segment, ~20% in Crop nutrients and 8-9% range in the pigments business. With this, MOL is expected to deliver a significant growth in its bottom-line over the next two years. The stock is currently trading at 12x to FY27E EPS. We assign PE valuation of 18x to FY27 EPS to arrive at a target of Rs. 145/share, providing with an upside of 48% over the CMP.

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