India's drive to build domestic capabilities in semiconductors and batteries depends heavily on a crucial but often overlooked component: high-precision chemicals. As the nation works to cut import reliance in strategic supply chains, one mid-sized chemical company is making a bold move. Acutaas Chemicals, traditionally focused on advanced pharmaceutical intermediates, is now expanding into two demanding niches: semiconductor-grade photoresist chemicals and battery electrolyte additives.
The Strategic Shift
This diversification places Acutaas at the intersection of two high-growth industries. Both segments require extreme purity, deep process control, and long qualification cycles. The company is leveraging its expertise in pharmaceutical chemistry to navigate these technical challenges. The timing is critical. Global battery demand surpassed 1 terawatt-hour for the first time in 2024, fueled by a 25% rise in electric vehicle sales to 17 million units. Battery pack prices have dropped below $100 per kWh, speeding up adoption in mobility and grid-scale storage.
Market Opportunities and Policy Support
In India, battery chemicals represent a sunrise industry. Analysts expect it to grow at a compound annual growth rate of over 15%. This growth is supported by policy initiatives like the ₹18,100 crore Production Linked Incentive scheme for Advanced Chemistry Cell battery storage. The Atmanirbhar Bharat mission further reinforces this opportunity by pushing localization across the entire value chain.
A similar structural shift is unfolding in semiconductors. India's semiconductor market is projected to double from ₹4.5 trillion in 2024 to ₹9 trillion by 2030. Demand is rising from mobile handsets, IT, telecommunications, consumer electronics, automotive, aerospace, and defense sectors. Mobile devices and industrial applications already contribute nearly 70% of industry revenue.
Company Background and Core Business
Acutaas Chemicals built its foundation on advanced pharmaceutical intermediates. In FY25, this segment accounted for 84.8% of total revenue, making it the company's largest revenue driver. The API business focuses on developing and manufacturing intermediates for regulated and generic APIs, as well as New Chemical Entities. It serves more than 17 therapeutic segments, including anti-cancer, anti-psychotic, cardiovascular, and anti-depressant drugs.
The company commands a 50-90% market share in several critical intermediates. A key differentiator is its deep backward integration strategy. Over 90% of pharmaceutical intermediates are integrated with basic chemicals. This integration provides tighter control over supply, quality, and cost structures while enhancing customer reliability.
Alongside APIs, Acutaas operates a specialty chemicals business. This segment contributed 15.2% of revenue, supplying over 30 established products to the personal care and cosmetics industry. The company is export-heavy, with exports making up 74% of total revenue. It serves customers in about 55 countries, with Europe accounting for 63% of exports.
Entering the Semiconductor Space
Acutaas entered the semiconductor sector in FY23 by acquiring a 55% stake in Baba Fine Chemicals. This company specializes in electronic-grade photoresist chemicals used in the photolithography process of chip manufacturing. These products demand ultra-high purity standards, with contamination control at parts-per-billion levels to meet global fab specifications.
As of 2025, Acutaas is the only manufacturer of semiconductor-grade photoresist chemicals in India. Its strength in this segment relies on advanced quality systems, clean process design, and experience handling highly technical chemical formulations.
Scaling Semiconductor Ambitions
To scale its semiconductor ambitions, Acutaas is expanding its footprint across major hubs like South Korea, Japan, and Taiwan. A key milestone is the formation of Indichem Inc., a joint venture with South Korea's J & Materials Co. Acutaas holds a 75% stake, while the Korean partner brings technology, production expertise, and market access.
Indichem will manufacture and supply advanced semiconductor chemicals, including photo acid generators, for Korean and global markets. Commercial production and revenue contributions are expected to begin in the second half of FY27. Until then, semiconductor revenue is likely to remain lumpy. The volatility stems from earlier reliance on a single large customer, creating concentration risk during demand slowdowns.
This was evident in FY25 when Baba Fine revenue declined nearly 41% year-on-year to ₹17.6 crore. Net profit fell 70% to ₹3.8 crore due to weak demand. Alongside the joint venture, Acutaas has commercialized several new products. While initial volumes are modest, management expects these launches to support gradual growth.
Riding the Battery Wave
Acutaas has also positioned itself as an early mover in battery chemicals. It focuses on advanced materials for lithium-ion batteries. The global battery chemicals market is projected to exceed $107 billion by 2029, up from $70 billion in 2025. This growth is driven by EV adoption and falling battery costs.
This vertical is a core pillar of the company's "Industries of the Future" strategy. It aligns with global efforts to diversify battery supply chains away from China. Acutaas entered this segment in 2022, targeting high-value electrolyte additives that enhance battery performance, safety, and longevity.
The company is recognized as India's first player outside China to develop electrolyte additives at a global scale. Its core products are Vinylene Carbonate and Fluoroethylene Carbonate. These form protective layers on electrodes, improving stability, extending battery life, and reducing thermal runaway risk.
Expanding Battery Chemical Production
Beyond VC and FEC, Acutaas has built an innovation pipeline of around 10 products for next-generation lithium-ion and alternative battery technologies. To scale this business, the company is investing ₹180 crore to set up a dedicated electrolyte additives plant at Jhagadia, Gujarat.
The planned capacities are 2,000 metric tonnes each for VC and FEC. This capacity aligns with signed customer contracts and is expected to reach optimal utilization within about three years. Management expects a payback period of roughly 3.5 years. Production is scheduled to commence in the fourth quarter of FY26, with revenue contribution starting from FY27.
The facility is entirely export-oriented, with no current plans for domestic supply. Acutaas already has contracts with customers across various geographies. While this vertical is a key growth driver, Ebitda margins are expected to remain below the 28–30% levels of the API business. The company is also setting up another battery chemicals plant in Greater Noida.
Shifting to a CDMO Model
Alongside its expansion into new-age industries, Acutaas is accelerating its shift towards a contract development and manufacturing organization model. This move aims to improve long-term revenue visibility. The company has set a target of achieving ₹1,000 crore in CDMO revenue by FY28.
This target is supported by rising customer inquiries and the addition of new molecules to its development pipeline. Several CDMO projects are expected to begin contributing to revenue by the end of FY26, subject to regulatory approvals. At the same time, Acutaas is phasing out low-margin products and reallocating capacity toward higher-margin offerings.
Financial Performance and Margins
Acutaas reported robust financial performance in the first half of FY26. Revenue rose 21% year-on-year to ₹513 crore. The API business accounted for 83% of this, or ₹428 crore. Growth was driven largely by the CDMO business, supported by strong contributions from advanced intermediates.
The remaining 17%, or ₹85 crore, came from specialty chemicals. Operating leverage drove Ebitda up 86% to ₹146 crore. Margins expanded to 28% from 19% a year earlier. As a result, net profit more than doubled to ₹116 crore, up from ₹52 crore in H1 FY25. Return ratios remain strong, with ROCE at 25% and ROE at 23%, reflecting efficient capital use.
Valuations and Execution Risks
At ₹1,710 per share, Acutaas trades at an EV/Ebitda multiple of 41x. This valuation is not inexpensive. While it is at a discount to larger peers like Divi's Laboratories, which trades at 45x, it remains a premium to Torrent Pharmaceuticals and Sai Life Sciences.
Risks persist. The industry has historically relied heavily on China for raw materials. Although Acutaas has reduced its China sourcing to 21% in FY25, down from 70% a decade ago, supply disruptions remain a concern. Product and customer concentration also pose risks if key clients cut output.
However, diversification into semiconductors and battery chemicals reduces reliance on a narrow set of products over time. Ultimately, execution, customer diversification, and timely scale-up across these newer verticals will determine whether Acutaas' dual bet pays off.
