AKSHAR CHEM | CHINA SUPPLY DISRUPTION + SILICA EXPANSION
WHAT IS DRIVING THE STOCK
- Stock hit a fresh all-time high of ₹407.
- Q1 FY27 PAT surged to ₹15.2 Cr from just ₹0.7 Cr YoY.
- H-Acid prices reportedly jumped from ~CNY45,000/t to ~CNY120,000/t following Chinese production disruptions.
- AksharChem has spare capacity in H-Acid and Vinyl Sulphone, allowing higher realisations without immediate major capex.
SECOND — AND MORE STRUCTURAL — TRIGGER
- Precipitated silica capacity expanded 50% to 18,000 MTPA.
- Tyre makers are increasingly adopting silica-based “green tyres”.
- China+1 sourcing could create a longer-term demand opportunity.
- Unlike the H-Acid opportunity, silica could potentially become a more durable growth engine.
BUSINESS STRENGTHS
- 7.93 MWp + 2.4 MWp captive solar capacity.
- ~57% revenue from exports across 30+ countries.
- Added customers across Europe, Vietnam, Turkey, Taiwan and South Korea.
- ~82% repeat business indicates strong customer relationships.
THE BIG DEBATE — CYCLICAL OR STRUCTURAL?
- Q1 operating margin reached ~16%, and the market is increasingly pricing in sustained improvement.
- H-Acid price spikes can materially boost earnings if Chinese supply remains constrained.
- But if Chinese production normalises and H-Acid prices fall, the earnings benefit could reverse quickly.
- The silica expansion provides a potential structural offset to this cyclicality.
VALUATION / RISK
- At ₹407, the stock trades at ~26x earnings.
- FY26 ROCE was only ~0.2%, highlighting how sharply the market is looking through historical profitability.
- At an all-time high, the margin of safety is limited.
- The key question is whether current earnings are a temporary chemical upcycle or the beginning of a sustainable recovery.
KEY MONITORABLES
- H-Acid pricing and Chinese supply situation.
- Sustainability of ~16% operating margins.
- Utilisation and realisations from spare H-Acid/Vinyl Sulphone capacity.
- Ramp-up of 18,000 MTPA precipitated silica capacity.
- New customer additions and repeat-order momentum.
KEY TAKEAWAY
H-Acid is the near-term earnings trigger, while silica could determine whether the recovery becomes structural.
2September 4, 2026 978 1
