Acutaas Chemicals (ACUTAAS IN) – Q1FY27 Result Update – Long term growth outlook intact – Upgrade to ‘BUY’

We upgrade Acutaas to “Buy” from “Accumulate”, as we remain positive on the company's growth and improving business mix. Acutaas reported consolidated revenue of INR3.3bn in Q1FY27, up 59% YoY but down 24% QoQ. The strong YoY growth was driven by a 77% increase in the Advanced Intermediates business, supported by continued momentum in CDMO and healthy growth in the core advanced intermediates portfolio. The Specialty Chemicals business declined 11% YoY due to weakness in commodity products, which are gradually being replaced by higher-value products. However, BFC delivered strong growth during the quarter, partially offsetting the decline. The Pharma Intermediates and Specialty Chemicals segments reported EBITDA margins of 36% and 24%, respectively. We believe the company is well positioned to sustain its growth momentum, driven by the ramp-up of the Fermion contract, commercialization of four additional CDMO molecules in H2FY27, and contribution from the battery starting Q2FY27 and increasing share of semiconductor chemicals businesses. Supported by strong process chemistry capabilities, backward integration, and an expanding presence in high-entry-barrier specialty chemical segments, ACUTAAS is well placed to deliver sustained earnings growth over the medium term. At the CMP, the stock trades at 48x FY28E EPS. We value the stock at 56x FY28E EPS, implying a target price of INR3,790, and upgrade to 'Buy'.