With increasing demand and receipts, specialty chemicals manufacturers have been in focus for quite some time now. As Indian markets hit new record highs, specialty chemical stocks have outperformed and continue their uptrend multibagger returns This year the companies have seen significant improvement in profits and earnings over the past one year.
The sharp jump can be attributed to a better outlook and the fact that the COVID pandemic has accelerated the transition from China to other countries. Sriram Ramdas, Green Portfolio Analyst, SEBI Registered Portfolio Management Services, said, “If we are seeing an indication of capacity expansion of all the companies we monitor in the industry and increase in demand from customers who were earlier buying from China, we will watching the most.”
These global chemical companies have now recognized the need to diversify from China and the manufacturing competitiveness that India offers. “With these tailwinds, we expect the industry to expand at a 12% CAGR by FY2027, and to sustain the rally in related stocks. He further predicts that exemplary businesses such as Transpeak Industries and Valeant Organics will grow further. will be the major beneficiaries.” Ramdas added.
The chemical sector has created impressive assets for investors over the past five years as most stocks have manifolded but valuation concerns across several counter.
“Opportunities will multiply over the next five years, driven by increasing cost pressures, better availability of feedstock and increased outsourcing and disinvestment in the developed world due to import substitution. This will lead to a significant increase in India’s share of global chemicals, but the sector may see some volatility depending on the pricing environment. Investors should be selective now as most of the companies will not be able to enjoy the current level of growth and margins,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.
Despite the bull run, Deepak Nitrite continues to be their preferred bet as there is growth visibility with some relaxation in valuations. Meena also expects SRF, Aarti Industries and PI Industries to continue to perform well.
Analysts are optimistic on the sector as they expect India’s share of specialty chemicals to double in the next five years, as its well-established chemical industry has significant advantages over other countries and the biggest beneficiary of global supply chain changes. Used to be. China
Despite the upward move relative to historical averages and costlier valuations, -Jyoti Roy, DVP, Equity Strategist, Angel Broking remains positive on the chemical sector considering strong growth prospects for the industry over the next 3-5 years.
Don’t miss a story! Stay connected and informed with Mint.
download
Our App Now!!
.