INSUBCONTINENT EXCLUSIVE:
norms, tighter financing and consolidation.
Stocks from the sector have already delivered manifold returns to investors in last 15 years,
with Vinati Organics rallying the most at 34,514 per cent to trade at Rs 1,014 on February 20 against Rs 2.90 on February 21, 2005
Alkyl Amines and Bodal Chemicals has jumped over 10,000 per cent in this period.
Analysts are bullish on select chemicals players on rising
industry has managed to stand strong amid a turmoil in the domestic economy
For instance, between 2006 and 2019, the compounded annual growth rate (CAGR) in terms of total returns to shareholders by domestic chemical
companies stood at 15 per cent, much higher than the 8 per cent CAGR returns delivered by the global chemicals industry and 6 per cent CAGR
returns delivered by equities globally.
Even between 2016 and 2019, when both the domestic economy and domestic market faced headwinds, the
chemical industry maintained a CAGR return of 17 per cent.
Cumulative net sales of nearly 100 top listed chemical players have jumped to
over Rs 93,000 crore as of March 31, 2019 from Rs 19,789 crore as of March-end, 2005
annual GDP growth of 7 per cent for last 30 years
The country is also working on becoming a $5 trillion economy
This long-term optimistic scenario bodes well for chemicals firms, especially in the light of a long investment cycle
end-use sectors such as agriculture, consumer and retail, infrastructure, auto and electronics and healthcare could spur around 50 per cent
of incremental growth in chemicals as the economy grows.
Shares of Jyoti Resins, Atul Industries, Deepak Nitrite, Oriental Carbon and Ganesh
Benzoplast have rallied between 5,000 per cent and 10,000 per cent since February 2005
Overall, 92 per cent of the companies from the sector have delivered positive returns during this period.
Specialty chemicals are a leading
chemical export segment, making up more than half (55 per cent) of total chemicals export value in 2018
Yet, they are just 3 per cent of the total export value of specialty chemicals worldwide, compared with 13 per cent for China, 11 per cent
for Germany and 5 per cent for Japan
Clearly, there is room for growth.
These are characterised by relatively high-value, low-volume chemicals used in specific end-user
performance-enhancing applications
These broadly cover polymer additives, personal care ingredients, water treatment chemicals, construction chemicals, paints and coatings,
colorants, among others.
The segment reported decent financial results in Q3FY20
to the benefit of tax credit in SRF and reduction in tax rate
Management commentaries remained positive, as rising enquiries from customers and strong growth visibility are driving optimism in the
It has also raised target multiple for SRF (Target price Rs 4,167) and Aarti Industries (Rs 1,138) on the back of strong growth visibility