Acutaas Chemicals, a company with a traditional focus on pharma intermediates, is making a very bold move into the high purity chemicals required for the semiconductor and battery industries of India. The company plans to capitalize on the favorable trends of the world demand chain to move into this high growth industry.
Regulatory Tailwinds Pave the Way:
The localization of strategic supply chains in India is offering numerous opportunities for the manufacture of chemicals in the country. A mid-sized company named Acutaas Chemicals, with the reputation of a pharmaceuticals intermediate expert, is positioning itself strategically at the intersection of the country’s semiconductor and battery sectors.
The diversification strategy of the company is focused on meeting niches requiring extreme purity, such as semiconductor-quality photoresist chemicals and battery electrolyte additives. This is aligned with government initiatives such as the “Atmanirbhar Bharat” mission, which focuses on de-linkage from import dependency and enhancing indigenous production capabilities of the country.
Pharma Roots Provides Foundation:
Acutaas Chemicals’s business model is based on advanced APIs, which remain the primary source of its revenues even now. In the fiscal year 25, APIs constituted 84.8% of the company’s cumulative income, catering to over 17 therapeutic groups. Another major benefit for the company is that it is a completely backward-integrated organization with over 90% of its APIs traceable to basic chemicals.
The specialty chemicals division, accounting for 15.2% revenue, fulfills the requirements for personal care and cosmetics. The exports are quite substantial, accounting for 74% revenue. Europe remains the major market for exports.
Betting on Semiconductor Chemicals:
Strategic move: Acutaas will buy 55% of Baba Fine Chemicals, an Electronic Grade Photoresist Chemicals company. These products play an important role in the lithography process of chip manufacturers, involving contamination control in parts per billion. Currently, Acutaas is the only Indian company with the capability of producing these semiconductor-grade chemicals.
To achieve scale in such a business, Acutaas established a joint venture named Indichem Inc. in collaboration with a company from South Korea named J & Materials Co., acquiring a 75% stake in the company. This joint venture is to manufacture cutting-edge chemicals for semiconductors targeting the Korean as well as international markets and is expected to go into commercial production in H2 FY27.
Riding the Battery Wave:
Acutaas is also an important participant in battery chemicals with its focus on specialty materials for lithium ion batteries. The demand for batteries globally is rising rapidly with the adoption of electric vehicles and declining pricing. It ventured into this market in 2022 and created specialty electrolyte additives such as Vinylene Carbonate (VC) and Fluoroethylene Carbonate (FEC).
It is also investing in a separate electrolyte additives facility in Jhagadia, Gujarat, to produce 2,000 metric tons of VC & FEC each, at a cost of Rs 180 crores. This unit is expected to be operational in Q4 FY26, and earnings can be expected from FY27. This is an export-oriented unit.
Strategic Expansion and Valuation:
The company is stepping up plans for a transition into a Contract Development and Manufacturing Organization (CDMO) model and aims for ₹1,000 crore in CDMO revenue by FY28. This gives revenue visibility and helps free up capacity for more profitable products.
For H1 FY26, Acutaas has delivered strong numbers: revenues grew 21% to ₹513 crore, and Ebitda earnings surged 86% to ₹146 crore, with margins touching 28%. The net profit has more than doubled to ₹116 crore. Acutaas is currently quoting at a steep valuation multiple of 41 times EV/Ebitda ratio, at a price of ₹1,710 per share.
