InCred Equities backs Camlin Fine Sciences; bets on vanillin-driven growth

The brokerage highlighted the strength of CFSL's blend portfolio and its Vinpai acquisition, both of which are expected to drive strong margins, create entry barriers, &unlock solid revenue potential

Brokearge firm InCred Equities has reiterated its ‘Add’ call on Camlin Fine Sciences Ltd (CFSL), citing that the speciality chemicals company is set to benefit from structurally tight vanillin markets in the US and Europe. 

 

The brokerage highlighted the strength of CFSL's blend portfolio and its Vinpai acquisition, both of which are expected to drive strong margins, create entry barriers, and unlock solid revenue potential.

 

According to InCred Equities, CFSL is expected to benefit from the tight global vanillin market, with prices forecasted to exceed $32 per kilogram in the US and $19 per kilogram in Europe by the second half of FY27.

 

 

"CFSL is positioned to benefit from the tight vanillin markets in the US and Europe, where prices are expected to top $32/kg in the US and €19/kg in the EU by FY27," the brokerage said in its report.

 

InCred Equities analysts Satish Kumar and Chaitya Doshi have valued CFSL at 17 times FY28F EV/Ebitda, setting a target price of ₹480 per share. The company’s shares were trading at ₹151.20 per share at 1:31 PM on January 7, up 5.74 per cent from the previous close of ₹142.99 per share on the NSE.  CATCH LATEST STOCK MARKET UPDATE LIVE

Vanillin: Trump tariff or not, US prices to rise in H2FY27F

CFSL's vanillin plant, commissioned in January 2023, faced a prolonged start-up phase due to technical issues such as color inconsistency and chlorine contamination, which delayed commercial sales until the second half of 2024. However, with these challenges now resolved, InCred said the focus shifts to structurally tight global markets.

 

Europe and the US, which together consume around 14,000 tonnes per annum (tpa) of high-quality vanillin, are key target markets for CFSL. The brokerage noted that limited local capacity, the gradual restart of Solvay’s mothballed plants, and the elimination of Chinese imports due to punitive anti-dumping duties have resulted in significant supply gaps.

 

"US spot prices are already in the range of $20–22 per kilogram and are expected to rise to more than $32 per kilogram by H2FY26, while European prices are forecast to increase from €13–15 per kilogram to €15–16 per kilogram, structurally benefiting non-Chinese suppliers like CFSL," said the brokerage in its report.  ALSO READ | Nomura hikes Max Financial's target price as it expects co to outpace peers

Blend portfolio: High entry barriers and real value drivers

CFSL’s blend portfolio, which includes Xtendra (synthetic antioxidants), Nasure (natural plant-based antioxidants), and Ezential (high-value functional blends), analysts believe, is positioned to benefit from rising formulation complexity, application specificity, and significant entry barriers.   According to InCred, the Xtendra range of synthetic antioxidants, while based on commodity molecules, stands out through its formulation expertise and lengthy customer approval cycles. The Nasure blends, derived from plant extracts like rosemary, tocopherols, and acerola, command premium pricing due to the variability in raw materials, regulatory complexities, and the growing demand for clean-label products. The Ezential range represents the highest-value tier, delivering functional benefits across multiple applications such as bakery, confectionery, oils, and dairy.

 

Products like Ezential 4001 (paneer coagulant), which enhances yield, texture, and processing performance, create high switching costs and sticky revenue. In fact, 4001 alone is expected to generate approximately ₹65 crore annually in India.  ALSO READ | Domino's operator upgraded to 'Buy'; Antique raises target post Q3 update

Vinpai acquisition: Unlocking new growth avenues for CFSL

The Vinpai acquisition has strategically transformed CFSL into a global platform for clean-label and natural solutions, providing access to approximately 3,000 products across various categories, including dairy additives, flavours, texturisers, emulsifiers, nutraceuticals, cosmetics, and medical alginates.

 

Vinpai’s Vin’Curd product, which offers a 30 per cent yield improvement at a 3.6 per cent dosage in India’s 120,000-tonne organised cheese market, illustrates the commercial potential of the acquisition. With value-based pricing of approximately ₹1,750 per kilogram, this could translate to an addressable market of approximately ₹430 crore.

 

"While trials and FSSAI approvals are still pending, successful commercialisation of Vin’Curd would significantly expand CFSL’s addressable market, deepen entry barriers, and further reinforce its positioning as a solutions-led, high-value ingredient partner rather than a commodity supplier," said InCred in its report.

 

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