Motilal Oswal initiates 'Buy on Privi Speciality Chemicals; sees 25% upside
Motilal Oswal expects the global aroma chemicals market to grow from $5.4 billion in CY23 to $9.2 billion by CY30, a CAGR of around 8 per cent
 "Motilal Oswal initiates 'Buy on Privi Speciality Chemicals; sees 25% upside")
Motilal Oswal Financial Services has initiated coverage on Privi Speciality Chemicals stock with a ‘Buy’ rating and a target price of ₹3,960 per share, implying 25.2 per cent upside from Friday’s close of ₹3,162.05.
The brokerage expects strong compounding, projecting a compound annual growth rate (CAGR) of 27 per cent in revenue, 34 per cent in Earnings before interest, tax, depreciation and amortisation (Ebitda) and 46 per cent in adjusted profit after tax (PAT) over FY25–28, driven by capacity expansion, a richer product mix and scale-up in green chemistry.
Privi Speciality Chemicals is an aroma chemical maker and exporter with a portfolio of 75 products, has over three decades of operating history and strong in-house research and development (R&D) capabilities.
Why is Motilal Oswal bullish on Privi Speciality Chemicals?
Leveraging scale, integration, and product leadership for stronger growth
Motilal Oswal expects the global aroma chemicals market to grow from $5.4 billion in CY23 to $9.2 billion by CY30, a CAGR of around 8 per cent, supported by rising demand from home care, personal care, and food and beverage applications. To capture this growth, Privi plans to ramp up capacity in its core aroma chemicals business from 48,000 tonnes to 66,000 tonnes by March 2028, funded through a mix of internal accruals and debt, according to analysts.
Alongside volume-led growth, the company is sharpening its focus on higher-value, higher-margin products, which Motilal Oswal believes will further strengthen profitability. ALSO READ | 5 top quant multi-factor 'Buy' ideas from Motilal Oswal for December 2025
Cost edge from CST integration keeps Privi among the lowest-cost producers
The company’s key raw materials, crude sulphate turpentine (CST) and gum turpentine oil (GTO), are central to its cost advantage. Unlike many peers that rely on more volatile, China-linked GTO, Privi is one of only four global players — and the only one in Asia — with the capability to efficiently process CST at scale. It operates the world’s largest single-site CST refinery, commissioned in CY16.
The company’s flexibility to switch between CST and GTO depending on economics allows it to remain a lowest-cost producer and provide more stable pricing to business-to-business (B2B) customers, noted Motilal Oswal.
Strategic push into green chemistry via Privi Fine Sciences
Privi is deepening its green chemistry play by merging with Privi Fine Sciences and Privi Biotechnologies. Additionally, the Jhagadia unit makes furfural and cyclopentanone (CP) from corn cobs, rather than conventional kernel-based ethanol routes. Privi aims to become India’s first fully integrated producer of maltol — a flavour enhancer currently only made in China — from furfural, and to offer bio-based CP for use in semiconductors, pharmaceuticals, fragrances and polymers. It is also piloting downstream products such as ferulic acid and bio-vanillin from corn cobs.
Motilal Oswal notes these green-chemistry products carry gross margins above 40 per cent, with capacity planned at 18,000 tonnes in FY27, rising to 36,000 tonnes by FY29. Their revenue share (ex state incentives) is projected to increase from around 6 per cent in FY27 to roughly 27 per cent in FY29, materially boosting growth and margins.
Joint Venture with Givaudan moves Privi up the value chain
In 2021, Swiss fragrance major Givaudan SA formed a joint venture with Privi to produce speciality fragrance ingredients at a greenfield facility in Mahad, Maharashtra, focused on small-to-mid volume, higher-complexity molecules. Privi owns 51 per cent and Givaudan 49 per cent.
Motilal Oswal believes committed offtake, formulation stickiness and tighter specs should support high utilisation and pricing discipline. The joint venture is seen as a strategic milestone that strengthens a long-standing client relationship, upgrades Privi’s technology and positions it as a co-creator of high-value, sustainable fragrance ingredients in the global flavours and fragrances chain. Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.