Archean Chemical Industries has released their financial results for Q2FY25, which were disappointing. The company experienced a decline in revenue and profit after tax (PAT) of 17% and 74% respectively, compared to the previous year.

The decrease in PAT can be attributed to an inventory loss of INR 402 million from industrial salt, which saw a volume decline of 4.72 lakh MTPA. Adjusted PAT also fell by 15% due to lower volume offtake and reduced profitability.

Despite these challenges, Archean Chemical Industries is investing in silicon carbide and zinc bromide battery technologies, indicating a shift towards a more specialized and value-added product portfolio. Analysts have revised their earnings estimates downward for FY25 and FY26 by 21% and 10% respectively, reflecting weaker demand in the export market for bromine and lower industrial salt volumes. However, the bromine derivatives business is expected to contribute positively starting from H2FY25.

In light of these developments, KR Choksey has upgraded the forward P/E multiple for Archean Chemical from 19x to 20x, setting a new target price of INR 890, down from INR 943. This suggests a potential upside of 32.6% from the current market price.