At a Glance
Archean Chemical Industries Ltd went from “dark horse IPO” to “what’s going on with margins?” in just under three years. From a loss of ₹36 Cr in FY20 to a profit of ₹162 Cr in FY25, the turnaround sounds dramatic. But growth has flatlined post-IPO, bromine prices cooled off, and margins got eroded like a beach during cyclone season. Is it still India’s marine chemical crown jewel or just a salty rerun of commodity fatigue?

1. 🌐 What Does Archean Even Do?

• Makes bromine, industrial salt, and sulphate of potash.
• Based in Gujarat, digs out value from underground brine reserves.
• Major export play: over 70% of revenue comes from global clients, especially China and Japan.
• Claimed lowest-cost bromine producer in India. Cool. But…

2. ₹ FY25 Snapshot

Translation: Sales shrank, profits halved, margins got punched.

3. 🤜 The IPO & Post-Listing Honeymoon

• Listed in Nov 2022 at ~₹507.
• Immediately popped to ₹740+, rode the bromine price surge.
• FY23 was a blockbuster year – investors were high on salt.
• Then bromine prices dipped – and the high wore off.
• FY25 profits fell 58% from FY23 peak.

4. ⚡ Margins: From Elite to… Eroded

• FY23: 44% EBITDA margin. Flexed like a pharma company.
• FY25: Just 30%. That’s more FMCG than specialty chemical.
• Culprits:
  • Rising raw material costs
  • Price correction in bromine exports
  • Operating leverage unwinding as sales volume fell

5. 🏛️ Balance Sheet = Reasonably Clean

• Debt: ₹235 Cr (modest, up from ₹69 Cr in FY23)
• Reserves: Grew from ₹243 Cr (FY22) to ₹1,839 Cr (FY25)
• Fixed asset base of ₹1,378 Cr, including capacity investments
• Cash flow from ops fell sharply: ₹379 Cr → ₹176 Cr (FY25)
• Negative free cash flow for FY25 after capex & finance

6. 🔢 Cost Leader, but No Pricing Power

• Being low-cost helps, until:
  1. Prices collapse
  2. You can’t raise prices
• Competitors in China, Israel cut prices in global markets
• Archean has no strong brand moat – it’s a commodity supplier
• FY25 results reflect: volume was okay, realisation hurt

7. 🔧 Capacity & Capex

• Added capacity across bromine and SOP plants
• But utilisation stayed muted
• FY26 guidance? “Recovery in exports, stable pricing”
• Capex in FY25: ~₹246 Cr
• But ROCE halved from 25% → 13%. Uh-oh.

8. 🕵️ Promoter & FIIs

• Promoters hold steady at 53.4%
• FIIs slowly building stake: 6% → 10.9% (in 5 quarters)
• DIIs trimming exposure: 30% → 23% (FY23 to FY25)
• Public holding increasing

Interpretation: Smart money took profits when FY23 peak was in, institutions rotated out.

9. 🌕 Global Dynamics

• Bromine market largely driven by China and flame retardant industry
• Sulphate of potash demand is stable but not booming
• FX rates helped in FY23 but normalized later
• Global slowdown hurt discretionary demand in chemical industry

10. ☑️ Valuation Check

Fair Value Range (based on historical P/E, margin cycles, and RoCE):
₹450 – ₹550

Above ₹550? You’re paying for a bromine miracle again.

11. 🧩 Risks & Red Flags

• Margin compression is real and may persist
• Low float, stock swings wildly
• Capex ROCE not justifying investment yet
• Working capital days rising: 67 → 98 in 3 years
• Inventory days ballooning = demand slowdown?

12. ✨ Verdict: Salty, Not Sweet (Yet)

Archean has all the ingredients: niche chemical focus, export base, cost edge. But it’s stuck in a margin trap, post-IPO slowdown, and price cycles it can’t control. It’s not a scam. It’s not a rocket. It’s just a reality check in saltwater packaging.

If bromine prices bounce back and capex yields kick in, there’s upside. Till then, maybe don’t go all-in on chemicals without diversification.

Tags: Archean Chemical, bromine stocks, specialty chemicals India, IPO 2022, marine chemical exporters, chemical margin compression, EduInvesting

✍️ Written by Prashant | 🗓️ 14 June 2025