Motilal Oswal initiates coverage on Himadri Speciality Chemical with Buy rating, pegs 39% upside

Motilal Oswal Financial Services (MOFSL) has initiated coverage on Himadri Speciality Chemical with a Buy rating and a target price of Rs 780, implying an upside of around 38.7% from the stock's Thursday closing price of Rs 562.55 apiece on the NSE.

Himadri Speciality Chemical shares settled 2.11% lower on Thursday against the previous close of Rs 574.70. The brokerage is betting on the company's expansion into battery materials and its strategy to move up the carbon materials value chain.

In its research report, analysts Sumant Kumar, Yash Darak, Swapnil Upadhyay and Nirvik Saini said Himadri is evolving from a coal tar distillation player into an integrated specialty carbon and advanced materials company, with a diversified portfolio spanning coal tar pitch, carbon black, naphthalene derivatives, battery chemicals and tyres.


"We expect Himadri to deliver strong growth, with a 24%/23%/21% CAGR in revenue/EBITDA/PAT over FY26-29," the brokerage said, attributing the growth to the scaling up of its battery materials, specialty carbon black, carbon nanotubes (CNTs) and super specialty carbon black (SSCB) businesses, alongside the expansion of Birla Tyres.

A key growth driver is Himadri's entry into lithium-ion battery materials through lithium iron phosphate (LFP) cathode and anode materials, targeting electric vehicles (EVs) and battery energy storage systems (BESS).

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The company is targeting 40,000 metric tonnes per annum (MTPA) of LFP cathode capacity by FY28, involving a capital expenditure of around Rs 1,125 crore. It is also developing anode materials through a 200 MTPA pilot facility, entailing an investment of around Rs 120 crore.

MOFSL estimates that the global LFP cathode and anode market could reach approximately $193 billion by CY35. Himadri's ambition of generating around $3 billion in battery chemicals revenue would translate into a potential market share of approximately 2%.

The brokerage identified China+1 sourcing opportunities, the OBBBA, India's cell manufacturing ramp-up and growing global adoption of LFP technology as key growth drivers for the battery materials business.

Moving up the carbon materials value chain

Himadri is also expanding into higher-value carbon products, including speciality carbon black, CNTs, SSCB and downstream chemicals, leveraging its leadership in coal tar pitch (CTP).

The company has capacity to cater to around 80% of domestic CTP demand. MOFSL believes its integrated carbon platform provides an opportunity to expand into speciality segments, supported by rising demand from EVs, batteries and electronics, along with China+1 sourcing opportunities.

The brokerage expects these initiatives to support diversification and margin expansion.

Birla Tyres acquisition adds forward integration

Himadri's acquisition of Birla Tyres for Rs 310 crore has enabled forward integration for its carbon black business by providing an entry into tyre manufacturing.

Production at the Balasore facility resumed in May 2025, with Himadri leveraging its in-house carbon black to improve control over tyre chemistry.

Birla Tyres has 49 distributors, more than 1,000 dealers and exports to seven countries. The company plans to expand its product SKUs from 75 to around 400 and enter the passenger car radial (PCR) tyre segment in FY27.

MOFSL expects these initiatives to drive a 109% revenue CAGR over FY26-29.

Valuation and risks

The brokerage expects Himadri to trade at 29 times, 24 times and 20 times its estimated earnings per share (EPS) for FY27, FY28 and FY29, respectively. The company is projected to deliver a return on equity (RoE) of 18% and return on capital employed (RoCE) of 15% in FY29.

"We value the company at 30 times FY29E EPS, in line with its 10-year average one-year forward P/E of 30.6 times," MOFSL said, arriving at a target price of Rs 780 and assigning a Buy rating.

Among the key risks highlighted by the brokerage are unplanned manufacturing shutdowns, equipment failures, utility disruptions and dependence on third-party suppliers and coal tar.

Disclosure: This article has been written by Kumar Gaurav, who is not a Sebi-registered Research Analyst or an Investment Adviser. Gaurav and their ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here