Shares Experience Setback After Historic Rally
Shares of Himadri Speciality Chemical have come under intense selling pressure, following an extended rally with little to no pullbacks. Currently trading at ₹547, the stock is down 20.5% from its all-time high of ₹688 per share, which was reached in late September. However, despite this recent decline, Himadri has posted an impressive 77% gain in 2024. Between March 2023 and September 2024, the stock skyrocketed by 700%, gaining in all but three months.
Temporary Pullback in a Strong Growth Story
Market analysts view this downturn as a temporary blip, with long-term prospects remaining strong. ICICI Securities, in its latest report, initiated coverage on the stock with an ‘ADD’ rating and set a target price of ₹600 per share.
Expanding in Tyres and Battery Chemicals
Himadri holds a dominant position in India’s coal-tar value chain, with a 60-70% market share in Coal Tar Pitch (CTP) and other derivatives. The company has also forward-integrated into carbon black production, focusing on specialty black, which has applications in plastics, fibres, coatings, and inks.
The company has also expanded into the tyre segment through its acquisition of Birla Tyres, secured via the NCLT process in partnership with Dalmia Bharat Refractories (DBRL) for ₹3.06 billion.
Foray into Lithium-Ion Battery Materials
Himadri is making a strategic move into lithium-ion battery materials, planning to produce cathode active material—lithium iron phosphate (LFP). The company is setting up a pilot plant with a capacity of 400 TPA for LFP by FY26, which is expected to shorten the timeline for launching a commercial-scale plant.
Favorable Market Dynamics for Coal Tar and Carbon Black
ICICI Securities highlighted a favorable cycle for coal tar and carbon black, noting that China’s position in the coal chemicals value chain has softened. As a result, India’s global position in coal chemical supplies has strengthened. India has seen a surge in exports of CTP, with prices remaining robust around ₹65, up from the long-term median of ₹42.
Himadri is actively expanding its export markets, targeting regions such as South Africa, the Middle East, and Australia. Increased export sales offer two key advantages: improved capacity utilization and higher profitability, as exports tend to command a 10-15% premium pricing.
Expansion Plans and Strong Demand for CTP
The company is also planning to expand its coal tar distillation capacity from 500 KTPA to 600 KTPA by FY26, further enhancing its presence in the growing export market. The steady demand for CTP, especially from aluminum production, ensures stability as this is a critical input for smelters, which cannot easily adjust capacity utilization.
With this ongoing expansion, Himadri is poised to further strengthen its market position and profitability in the coming years.
