Reinventing the aroma chemicals landscape
Privi Speciality Chemicals (PRIVI) is India’s largest aroma chemical manufacturer and exporter with 75 products and over 30 years of industry expertise. The company also develops custom aroma chemicals, with strong in-house R&D focused on innovation and process development.
The global aroma chemicals market is projected to grow from USD5.4b in CY23 to USD9.2b by CY30 at an 8% CAGR, driven by rising demand in home care, personal care, and food products. To leverage this growth, PRIVI plans to expand capacity from 48k MT to 66k MT in core products by Mar’28, to be funded through debt and internal accruals. In parallel, it is focusing on high-demand, high-margin value-added products to further enhance profitability.
To strengthen its green chemistry portfolio, PRIVI plans to merge with Privi Fine Sciences (PFSPL), which develops speciality aroma chemicals from renewable feedstocks. PFSPL’s facilities produce high-value bio-based products like furfural, cyclopentanone (CP) and maltol, positioning it as a pioneer in sustainable chemical manufacturing. Looking at strong opportunities in these new products (gross margins of more than 40%), the company plans to add 18k MT of capacity in FY27 and double it to 36k MT by FY29.
In Jul’21, PRIVI formed a JV with its long-standing client, Givaudan, to set up a new greenfield facility in Mahad, Maharashtra, for producing small-to-mid volume, high-complexity fragrance ingredients, with a total investment of ~INR2.7b. PRIVI holds a 51% stake in the JV, supported by equity contributions from both partners and loan funding from Givaudan. This collaboration strengthens a decades-old relationship and marks a major strategic milestone, enhancing PRIVI’s technological capabilities and positioning it as a co-creator of high-value, sustainable fragrance ingredients in the global flavor and fragrance (F&F) value chain.
We expect PRIVI to deliver a CAGR of 27%/34%/46% in revenue/EBITDA/adj. PAT over FY25-28, driven by an increase in capacity of its core products, an increase in TAM with the addition of new products, and improving relationships with existing customers (Givaudan). We value the stock at 28x FY28E EPS of INR141 to arrive at our TP of INR3,960. We initiate coverage on PRIVI with a BUY rating.
