Archean Chemical

The global chemical market remains challenging due to macroeconomic uncertainties, oversupply of raw materials, and aggressive pricing. Archean Chemical, however, maintains confidence in its long-term trajectory, expecting a partial recovery in demand and pricing post-Chinese New Year. India's domestic market continues to offer strong structural growth, and the company is focused on expanding market share and improving operational efficiencies. The impact of ongoing tariff changes on global trade remains a watch item.

For Q3 FY25, Archean Chemical reported a total income of Rs. 2,547 million, an increase from Rs. 2,520 million in Q2 FY25. Operational profit rose to Rs. 755 million from Rs. 698 million in the previous quarter. The company achieved an EBITDA of Rs. 963 million, with a healthy margin of 38%. For the nine months ended December 2024, total income stood at Rs. 7,301 million, and EBITDA was Rs. 2,710 million, with a 37.1% margin. Exports contributed significantly, accounting for 76% of Q3 revenue and 75% of 9M revenue.

In Q3 FY25, Bromine contributed 38% (Rs. 929 million revenue from 4,600 metric tons) of operating revenue, while Industrial Salt accounted for 61% (Rs. 1,491 million revenue from 758,000 metric tons). The bromine business is showing signs of recovery, with a production target of 20,000-25,000 tons for FY26. Industrial salt dispatches are improving, with a target run rate of 1-1.2 million tons in coming quarters. SOP trials are progressing well, with meaningful contribution expected post-monsoon, aiming for a reasonable target of 20,000 tons.

The ramp-up of the bromine derivatives plant is progressing steadily, with meaningful revenue growth anticipated in FY26. For clear brine fluids (CBF), trial shipments have been successfully dispatched, and the company expects a healthy contribution from this segment in the coming quarters. Demand for PTA synthesis remains steady, supported by growth in textiles and packaging industries. The company is confident that the bromine derivatives business will pick up in the next few quarters, with CBF and PTA volumes expected to be upwards of 10,000 metric tons.

Archean Chemical acquired Oren Hydrocarbon in July 2024 via the NCLT route. The company is making good progress in bringing these non-operative units back into operation, with plans to restart two units this quarter and two more in the coming months. This business complements Archean's CBF offerings, primarily catering to the oil and gas industry. Management expects to see meaningful revenues from Oren and aims for it to contribute 50% of its historical peak revenue (approx. Rs. 400 crores) in FY26.

The company held the groundbreaking ceremony for its Rs. 3,000 crore compound semiconductor facility in Odisha in January 2025, through its subsidiary SiCSem Private Limited. This project, the first of its kind in India, is expected to take 24-30 months from shovel to ground. Additionally, Archean has committed $12 million to Offgrid Energy Labs Inc. in the US, specializing in zinc bromide battery technology, aligning with its strategy to enter the energy storage sector, particularly for renewable energy and industrial applications.

Archean Chemical maintains a net debt-free status with a strong balance sheet, providing financial flexibility for strategic investments. The Rs. 3,000 crore semiconductor project will be partially funded by state government subsidies, with the remaining financing to be structured through the banking system. The company is sensitive to leverage and aims to utilize its balance sheet effectively. No large CAPEXs are planned for the next 6-12 months beyond groundwork for the semiconductor project.