Archean Chemical Industries Limited

Basic Materials — Chemicals · NSE

₹478.00+₹6.25 (+1.32%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Archean Chemical Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Archean Chemical Industries Limited manufactures and sells specialty marine chemicals in India and internationally.

IndustryChemicals

SectorBasic Materials

Employees257

Annual revenue₹1,077 Cr

How does it make money?

Turns over ₹1,077 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹24 left at the operating level before interest, tax and depreciation. Each of its 257 employees supports ₹4.19 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.19 Cr

Who are its competitors?

The closest listed comparisons in its industry are PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 7.7% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE15.4%

What is the outlook?

5 analysts covering the stock expect revenue to grow about 26.2% and earnings to grow about 89.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+26.2%

Est. earnings growth+89.9%

Analysts5

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -25% while net margin moved -63% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-25%

Margin effect-63%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 9.2% a year
✗ Profit has declined at 34.6% a year
✗ Profit fell 23.7% in the latest year

Quality vs. Valuation

Company Quality

40/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

29/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

60.7x

3Y Median

25.9x

40 monthly readings · mean 31.9x · range 16.6x–56.2x

Sector Median

33.8x

median of 3 sector peers

⚠️Current valuation is approximately 134% above its 3y median of 25.9x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 80% above the peer median of 33.8x.

vs. its own history

Expensive

25.9x median over 40 months · +134%

vs. sector peers

Expensive

33.8x median of 3 peers · +80%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

24.8x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.24x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 26.7% to 5.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 38.3% to 7.7% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 572% over 3 years, from ₹69 Cr to ₹466 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 21.8 points, from 45.5% to 23.7%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹243 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 72% over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 28% against revenue up -25% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 45.5% to 23.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 134% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 26.7% to 5.5%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 22%✓ 23.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹243 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 1.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 7.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 7.3x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✗ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 3 neutral · 5 weak

Market Cap

₹5,901 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

60.7x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.05x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.88

Profitable

Profitable on a per-share basis

ROE

5.5%

Weak

Weak capital efficiency

ROCE

7.7%

Weak

Low return on total capital employed

Debt/Equity

0.24x

Low

Conservative leverage

Revenue Growth (YoY)

11.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-23.7%

Falling

Profits are shrinking

Dividend Yield

0.52%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹243 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

15.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

13.5%

Average

Average margins

Net Margin

8.7%

Average

Average bottom-line conversion

Current Ratio

1.21

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.18

Defensive

Steadier than the market

52W Range Position

14%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

473.7 / 486.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

48.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,440 Cr	₹1,304 Cr	₹1,039 Cr	₹1,077 Cr	-9.2%
EBITDA	₹655 Cr	₹478 Cr	₹327 Cr	₹255 Cr	-27.0%
EBITDA Margin	45.5%	36.7%	31.5%	23.7%	—
PAT (Net Profit)	₹383 Cr	₹319 Cr	₹162 Cr	₹107 Cr	-34.6%
EPS	₹34.59	₹25.87	₹13.12	₹8.65	-37.0%
ROE	26.7%	18.7%	8.7%	5.5%	—
ROCE	38.3%	22.6%	10.5%	7.7%	—
Total Debt	₹69 Cr	₹98 Cr	₹235 Cr	₹466 Cr	+88.7%
Free Cash Flow	₹396 Cr	₹171 Cr	-₹87 Cr	-₹243 Cr	—

🔴 Revenue has shrunk at 9.2% a year over 3 years.

🔴 EBITDA has shrunk at 27.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 45.5% to 23.7% over 3 years (-21.8 pts).

🔴 PAT (Net Profit) has shrunk at 34.6% a year over 3 years.

🔴 EPS has shrunk at 37.0% a year over 3 years.

🔴 ROE has fallen from 26.7% to 5.5% over 3 years (-21.2 pts).

🔴 ROCE has fallen from 38.3% to 7.7% over 3 years (-30.6 pts).

🔴 Total Debt has grown at 88.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹396 Cr to -₹243 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,665 Cr

Total Liabilities

₹732 Cr

Cash & Equivalents

₹41 Cr

Operating Cash Flow

₹140 Cr

Capex

-₹382 Cr

Shareholding (proxy)

Institutional Holding

24.9%

Insider Holding

53.4%

Corporate Actions

Dividend Rate

₹2.5

Ex-Dividend Date

05 Jun 2026

Analyst Consensus

Recommendations

3 Buy · 2 Hold · 1 Sell

Target Price (Mean)

₹589.17

+23.3% vs CMP

Target Range

₹533 – ₹670

Peer Comparison

Company	P/E	ROE
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

4 mixed1 negative1 general

Archean Chemical Industries (NSEI:ACI) Stock Forecast & Analyst Predictions

Simply Wall Street, 12 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Buy Archean Chemical Industries; target of Rs 640: ICICI Securities

Moneycontrol.com, 04 Aug

ACI Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Why Is Archean Chemical Industries Share Price Falling: Key Reasons and Investor Analysis 2026

Univest, 13 MayPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Archean Chemical Industries consolidated net profit declines 23.66% in the June 2026 quarter

Business Standard, 31 JulResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Archean (ACI.NS) Stock Analysis: Bearish Signals After -2.49% Fall 2026-10-05 - IV Expansion Alert

https://www.siam.in/, 05 OctCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingBusiness Quality · Financial Health · Risk

WeakGrowth · Profitability · Valuation

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑