For years, India’s chemical and pharmaceutical companies largely operated behind the scenes, supplying ingredients that powered medicines, industrial products, and specialty applications. Now, some of them are preparing for a much bigger opportunity, one that sits at the centre of the global energy transition.
The reason is simple. Every electric vehicle, energy storage system, and data centre battery requires a complex mix of chemicals to function. As demand for these batteries rises, so does the need for the materials that go into them.
Industry estimates suggest the global battery chemicals market could grow from about US$14 billion today to more than US$115 billion by 2030, driven by electric vehicles, renewable energy storage, and the increasing power requirements of AI-led infrastructure.
At the heart of every lithium-ion battery is a chemical medium known as the electrolyte. It sits between the battery’s cathode and anode and acts as a channel for lithium ions. When a battery charges or discharges, these ions move back and forth through the electrolyte. This enables the flow of electricity. Without it, a battery cannot store or deliver power.
However, much of the supply chain remains concentrated in China. The country dominates several critical battery materials, prompting automakers and cell manufacturers worldwide to look for alternative suppliers under the increasingly popular “China Plus One” strategy.
This shift is creating opportunities for companies outside China to fill the supply chain gap and capitalise on the bigger opportunity. This is especially true as lithium-ion batteries are expected to remain relevant for at least the next decade.
Against this backdrop, two niche Indian pharma and specialty chemical companies have entered the battery chemicals market. Both companies are leveraging their chemistry expertise to enter a sunrise sector with a policy tailwind. Battery chemicals are also expected to be a driver of their future growth.
#1 Sudeep Pharma: The Battery Chemistry Play Targeting a 2.8x Revenue Leap
Sudeep Pharma makes specialty ingredients and mineral excipients for the pharmaceutical, food, and nutrition industries. This is the core of its business, accounting for 56% of revenue. The segment’s key products include mineral fortificants, fillers, and active pharmaceutical ingredients (APIs).
Specialty ingredients (44% of revenue), on the other hand, are the fastest-growing segment. It manufactures micronutrient premixes, encapsulated, granulated, and spray-dried ingredients, triturates, and liposomal nutrients. These ingredients are used in infant nutrition, dietary supplements, bakery products, dairy products, beverages, and functional foods.
Geopolitical Arbitrage: De-Risking LFP Cathode Supply Chains From China
Now, the company is building a new product: Battery Materials. Its subsidiary Sudeep Advanced Materials is setting up a new manufacturing plant in Dahej, Gujarat. It is leveraging its expertise in food-grain iron phosphate to manufacture battery-grade iron phosphate, a cathode-active material.
The cathode is an essential component for Lithium Iron Phosphate (LFP) batteries used in Electric Vehicles and Energy Storage Systems. LFP is 100% sourced from China. Therefore, cell manufacturers globally are looking to shift their supply chains away from China to improve supply security.
Sudeep’s supply chain is also fully compliant with regulations, helping customers meet stringent requirements under the US Inflation Reduction Act and the EU Critical Raw Materials Act. Its objective is not just to match China on cost, but to develop a reliable, high-performance, and scalable alternative outside China.
Capex Outlay: Inside the ₹600-Crore Dahej Production Roadmap
To meet global demand, site construction is underway at the 80,980 sq. mt. Dahej plant and equipment orders have already been placed. The plant will be built in 4 phases with an investment of ₹600 crore, each producing 25,000 metric tons (MT).
Phase 1 is expected to become operational by April 2027, with additional phases planned over the subsequent three years, i.e., FY28, FY29, and FY30. Once fully commissioned, the project is expected to take the total capacity to 100,000 MT by 2030.
Meanwhile, the company has upgraded its existing pharma iron phosphate facility to produce 5,000-7,000 MT of battery-grade material. It plans to use 50% of this to fulfill initial commercial orders and the remaining 50% to support customers in pilot validation. The battery material is engineered using in-house developed green technology.
Order Book Traction: Analyzing Commercial Off-Takes and Global Validation Funnels
Crucially, Sudeep Pharma has successfully demonstrated its product chemistry and is seeing global demand for its products. Sudeep currently has 42 active customers across South Korea, Japan, Indonesia, India, Europe, and the US. Of them, 22 are in the lab validation stage, 14 have moved to pilot-scale evaluation. Also, 6 have successfully completed commercial validation and are in active off-take discussions.
This high customer engagement suggests that Sudeep’s capacity could be strongly utilised once production ramps up. Meanwhile, the segment has already started receiving purchase orders. It has a total of 700 MT of orders, including a 500 MT order from a leading listed domestic player. It expects to sell around 2,500 MT of battery chemicals in FY27.
At the peak capacity utilization of 100,000 MT, the battery segment has a revenue potential of ₹1,600-1,800 crore, assuming an average market price of US$2/kg. This is 2.8x its FY26 revenue of ₹642 crore, up 27.9% from FY25 levels. Its profit also grew by 25.2% to ₹174 crore in FY26.
#2 Acutaas Chemicals: Pioneering Local Electrolyte Additive Landscapes
Acutaas Chemicals makes specialized chemical solutions for advanced pharmaceutical intermediates (APIs), specialty chemicals, and commodity chemicals. API accounts for 87.7% of revenue, and commodity chemicals (11.2%). Semiconductor chemicals also make up 1.2% of revenue.
Now, on the battery chemicals front, Acutaas made a strategic entry in 2022. While Sudeep focuses on the cathode, Acutaas focuses on the electrolyte. Acutaas has commissioned India’s first plant for electrolyte additives: vinylene carbonate (VC) and fluoroethylene carbonate (FEC).
Jhagadia Capex Outlays: Scaling India’s First Native Additive Plant
In addition, Acutaas currently has a pipeline of over 10 battery chemical products. Two more products are nearing commercialization in FY27. Furthermore, capex for a third product is likely to be over by Q1FY27, while a fourth product is in active development. It is investing ₹220 crore for its battery chemical operations.
These chemicals will be produced at the Jhagadia unit in Gujarat. The plant has an installed capacity of 2,000 MTPA for both VC and FEC. The first phase of the production is now officially underway. The second phase is expected to be finalized by Q1FY27. This segment will start contributing to revenue from FY27 onwards.
Off-Take Backstops: Insulating Revenues via 3-Year Supply Mandates
The electrolyte additives have already been validated and approved by over 5 industry-leading customers across three different countries. The entire 2,000 MT capacity for both VC and FEC is completely backed by long-term customer supply contracts for the next 3 years. This eliminates the risk of capacity underutilization and provides immediate revenue scale-up.
Acutaas aims to capture less than 1% of the total global demand. Notably, these electrolyte molecules can be used across verticals, including Sodium-ion, Lithium-ion, and solid-state batteries. This diversified usage future-proofs the business against shifting chemistries.
The 10x R&D Supercycle: Future-Proofing Multi-Battery Chemistries
Most importantly, to secure its upcoming product pipeline, Acutaas is expanding its R&D capacity by 10x. This new facility will feature dedicated sections for battery chemicals. This will enable cross-disciplinary innovation alongside its pharmaceutical and semiconductor divisions.
Looking ahead, after reporting 33% revenue growth in FY26 to ₹1,339 crore, management has guided for 25% year-on-year revenue growth in FY27, driven by the battery chemicals division. Operating margin expanded 13 percentage points to 36%, while net profit more than doubled to ₹356 crore from ₹160 crore in FY25.
Financial Health: How Return Ratios Compare with Industry Medians
Sudeep Pharma’s return on equity (ROE) is stronger than Acutaas’s, while the latter’s return on capital employed (ROCE) is significantly better than the former. In terms of valuation, Sundeep is currently trading at a 49x price-to-earnings (P/E) multiple following its December 2025 listing, which is a premium to the industry median.
While Acutaas is trading at a premium to both the industry and its historical 3-year median after rallying 186.6% over the past year. This optimism is fueled by its entry into sunrise sectors beyond its traditional API division, such as semiconductors and battery chemicals.
| Peer Comparison (X) | ||||
| Particulars | Price-to-Earnings Multiple | Return Ratios | ||
| Company | 3Y-Median | ROE (%) | ROCE (%) | |
| Sudeep Pharma | 49.0 | NA | 25.2 | 28.1 |
| Acutaas | 72.3 | 62.1 | 24.0 | 31.6 |
| Industry | NA | 32.2 | 12.5 | 15.1 |
Sudeep Pharma and Acutaas Chemicals are approaching the battery opportunity from different parts of the value chain. Both are diversifying from traditional chemical and pharma businesses to suppliers of critical battery materials.
With global customers looking to diversify sourcing beyond China and battery demand expected to grow as India aims to reduce reliance on imports, their early investments could open up a new growth avenue.
The key question now is whether they can translate customer validation, capacity expansion, and technological capabilities into a profitable, scalable business over the next decade. As strong contenders, these stocks are worth keeping on your watchlist.
Disclaimer
Note: Throughout this article, we have relied on data from http://www.Screener.in and the company’s investor presentation. Only in cases where the data was unavailable have we used an alternative, widely used, and accepted source of information.
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About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
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