Avient: A Strategic Bet on Sustainable Materials Leadership

The transition of Ashish K. Khandpur to CEO of Avient Corporation in December 2023 marks a pivotal shift for the specialty chemicals firm. With 28 years of expertise at 3M—where he spearheaded a $9 billion division and oversaw $1.9 billion in annual R&D—Khandpur brings a rare blend of technical mastery and commercial scale to Avient. Now, his leadership is poised to unlock significant value as the company capitalizes on secular trends in electric vehicle (EV) batteries, renewable energy infrastructure, and the circular economy.

The Case for Khandpur’s Expertise

Khandpur’s tenure at 3M was defined by two pillars: materials science innovation and global market expansion. As CTO, he managed 8,000 scientists and engineers, driving breakthroughs in polymers and composites. As Group President of 3M’s Transportation and Electronics division, he delivered 9% annual revenue growth, leveraging materials like high-performance adhesives and lightweight composites for automotive and 5G applications. This track record positions him to replicate success at Avient, where he has already demonstrated early wins.

In Q1 2025, Avient achieved 2% organic sales growth amid macroeconomic headwinds, with adjusted EBITDA margins expanding 20 basis points to 17.5%. Regional diversification stood out: Asia grew 9%, Latin America surged 17%, and EMEA logged its fourth consecutive quarter of growth. Khandpur’s focus on cost discipline—including $30 million in annual savings via operational efficiencies—has further strengthened margins.

Avient’s Strategic Positioning: EVs, Renewables, and the Circular Economy

Avient’s core advantage lies in its specialty materials portfolio, tailored to high-margin, sustainability-driven industries. Three key areas define its growth trajectory:

1. EV Battery Materials

Avient’s reSound™ REC TPEs incorporate post-consumer recycled content, reducing carbon footprints while enabling lightweight EV components. These materials are critical for battery enclosures and automotive parts, with vibration reduction of up to 80% compared to traditional thermoplastics. The company aims to source 50% of EV battery materials from renewable or recycled sources by 2025, aligning with global automakers’ sustainability mandates.

2. Renewable Energy Infrastructure

Avient’s NEUSoft™ TPUs are engineered for 5G antenna systems and lightweight solar panel components, enhancing energy efficiency. Its Cesa™ additives improve heat stability in APET packaging, reducing waste in renewable energy supply chains. With U.S. battery cell production capacity set to exceed demand through 2035 (per IRA incentives), Avient’s materials are integral to the clean energy boom.

3. Circular Economy Leadership

By 2025, Avient targets a 90% recycling rate for production waste in EV materials and 90% recycled content in key products. Innovations like ColorMatrix™ Lactra™ SX additives extend packaging shelf life, while ECCOH™ non-halogen flame retardants replace environmentally harmful alternatives. These commitments align with ESG investor priorities, shielding the company from regulatory and reputational risks.

Near-Term Catalysts for Value Creation

Three catalysts underpin Avient’s near-term upside:

1. 2025 Earnings Visibility

The company reaffirmed its $2.70–$2.94 EPS guidance for 2025, with Q2 2025 adjusted EPS expected to grow 4% year-over-year to $0.79. Margin resilience is underpinned by $100–$200 million debt reduction and a 3% dividend hike.

2. Strategic M&A and Capacity Expansion

While no recent acquisitions are disclosed, Avient’s $456 million cash balance and disciplined capital allocation allow it to pursue tuck-in acquisitions in specialty polymers or circular materials. Past deals, such as its 2021 ColorMatrix acquisition, have bolstered margins, and Khandpur’s network positions the firm to capitalize on undervalued targets.

3. ESG Compliance and Regulatory Tailwinds

Avient’s alignment with IRA tax credits and extended producer responsibility (EPR) frameworks ensures it benefits from policy shifts. Its non-PFAS additives and closed-loop systems also position it to meet EU and U.S. chemical regulations, reducing compliance risks.

Investment Thesis: Buy with a 12-Month Target of $45

Avient’s valuation lags its peers (current P/E ~15x 2025 EPS vs. industry average ~20x), offering a compelling entry point. With Khandpur’s track record of margin expansion and Avient’s dominance in EV/renewables supply chains, a multiple re-rating to 18x 2025 EPS yields a $45 price target, implying 35% upside.

The risks—macroeconomic volatility, trade wars—remain, but Avient’s regional diversification (Asia/Latin America growth offsetting U.S. weakness) and tariff mitigation strategies mitigate these. For investors seeking exposure to the EV revolution and sustainable materials, Avient is a buy.

Action: Buy AVNT at current levels. The structural tailwinds of decarbonization and circularity ensure this is no flash-in-the-pan opportunity—it’s a foundational bet on the future of industrial materials.