Chemical stock to buy now for an upside of 26%; Recommended by ICICI Direct

Synopsis:- A brokerage has issued a Buy call with a target of  Rs 5,365, implying 26% upside. The green-chemicals player benefits from 50+ years of expertise, a diversified base of 5,400+ end users across 80+ countries, and expansion plans backed by  Rs 750 crore capex, despite near-term margin pressure in Q2FY26.

India’s specialty chemicals sector is emerging as a high‑growth manufacturing pillar, with the market estimated at around USD 60–65 billion in 2024 and projected to cross USD 90 billion by 2030–2033, implying roughly 4–6% CAGR. Driven by pharmaceuticals, agrochemicals, personal care, textiles, and construction, India also accounts for about 6% of global specialty chemical demand, with strong China+1 tailwinds.

With a market capitalization of Rs 13,058.08 crore, the shares of Fine Organic Industries Ltd were trading at Rs 4,259.00 per share, increasing around 0.10 percent as compared to the previous closing price of Rs 4,254.80 apiece.

Brokerage Recommendations

ICICI Direct has turned constructive on the chemical stock, issuing a Buy call with a target price of  Rs 5,365. From the current level of  Rs 4,250.00, this implies a potential 26% upside, reflecting confidence in the company’s fundamentals, growth visibility, and medium-term earnings outlook.

As per brokerage analysis, Fine Organic Industries Ltd stands out for its strong pedigree in oleochemicals, manufacturing plant-based green additives that are increasingly replacing petrochemical alternatives. Its early-mover advantage, near-monopoly position in India, and 50+ years of experience create high entry barriers, strong customer stickiness, and long-term demand tailwinds.

The brokerage highlights FOIL’s solid positioning in food and plastic additives, built over decades of manufacturing and marketing expertise. Its specialised food emulsifiers enhance shelf life, texture, and stability, while polymer additives improve plastic performance and sustainability. Revenue risk remains low, with the largest customer contributing only ~3–4%, ensuring a well-diversified client base.

To drive the next growth phase, the brokerage notes a  Rs 750 crore capex at JNPA SEZ to ease capacity constraints expected in FY26–FY27, with production likely in 18–24 months. Additionally, the US subsidiary’s ~160 acre land acquisition in South Carolina supports long-term expansion and a stronger foothold in the North American market.

Financial & other Highlights

The company delivered a largely flat top-line performance, with revenue inching up just 0.16% year-on-year to  Rs 597 crore in Q2FY26. However, profitability softened as net profit declined 7% to  Rs 109 crore, indicating margin pressure despite stable sales and highlighting near-term cost or pricing headwinds.

Fine Organic Industries Ltd demonstrates a highly diversified global customer base, reducing concentration risk. The company offers 600+ products, serves 5,400+ end users, and works with 890+ direct customers and 240+ distributors across 80+ countries. Warehouses in the US and Europe further strengthen global reach, supply reliability, and long-term revenue stability.

Fine Organic Industries is an Indian specialty chemicals company focused on plant-based oleochemical additives. It supplies eco-friendly solutions to food, plastics, rubber, and other industries worldwide. With decades of experience, a diversified customer base, and global presence, the company benefits from rising demand for sustainable alternatives to petrochemical products.

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