At one time, Croda (LSE: CRDA) was one of the FTSE 100’s standout growth stocks. The shares surged after Covid, helped by demand for lipid ingredients used in vaccines, driving a sharp spike in sales. Since those dizzying highs, however, the stock has fallen hard — down around 70%.

Now, with efforts under way to simplify the business, refocus innovation on core markets, and rein in costs, is this now a forgotten FTSE 100 growth stock quietly setting itself up a comeback?

Turnaround play

Croda’s plan is essentially about getting the business back to basics after a difficult few years.

First, the group is refocusing on its core growth markets: Beauty, Pharma and Agriculture. These are the areas where it has stronger pricing power and more consistent demand.

Second, management is tackling what looks like a self-inflicted margin problem. Costs were allowed to rise faster than sales. A wave of acquisitions also failed to deliver the returns expected, resulting in weaker profitability.

Finally, the response is a push towards simpler, more disciplined execution. This includes a sharper innovation focus, closer alignment with customer needs, and greater use of digital tools and AI. The aim is to improve efficiency across manufacturing and supply chains.

Taken together, this isn’t a story about a broken business. It’s one that lost operating discipline. The key question for investors is whether these changes will actually deliver meaningful results

Growth engine showing early signs

The clearest evidence of Croda’s recovery plan sits in its Beauty business. This is the group’s largest and most important growth engine, and it’s been through a period of weaker demand as customers adjusted post-pandemic.

What stands out is the shift towards faster commercialisation of new ingredients, alongside efforts to extract more value from existing products. That matters because Croda’s model relies on being embedded in customers’ formulations, where switching costs are high and pricing power is stronger.

There are also signs of more targeted execution. The company is putting more effort into co-creation with customers and tailoring solutions for specific segments and regions. In particular it’s focusing on faster-growing markets outside Europe. This is helping rebuild momentum in areas that had previously slowed.

If this continues, Beauty could move from being a drag on performance to a stabilising — and potentially re-accelerating — growth driver for the group.

What could go wrong?

There are still clear risks to the recovery story. The biggest is execution. Croda has set out a wide-ranging reset across innovation, costs and operations, but delivering consistent improvement after several years of disappointment will take time. Any slowdown in demand from key end markets such as Beauty could also quickly expose ongoing margin pressure.

There’s also a risk that the investment cycle hasn’t yet fully worked through the business. Previous acquisitions and expansion efforts have left a higher cost base, and it’s not yet clear how quickly returns can be lifted back to historical levels.

That said, Croda isn’t standing still. The focus on simplification and more disciplined growth is a step in the right direction. After a sharp share price fall and a long period of underperformance, the stock now looks like a recovery story worth a closer look for long-term investors.

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Andrew Mackie does not hold any positions in the companies mentioned.