Specialty Chemicals’ capex to surpass pre-Covid levels: Report

Significant growth in domestic demand and exports has boosted the prospects of specialized chemical manufacturers. Their profitability continues to boom due to regular growth in receipts as well. Various disruptions in supplies caused by hurricanes in the US at the start of the year reduced supplies from US manufacturing centers, followed by the Suez Canal blockage and subsequent pandemic supply disruptions, all of which have led to regular increases in specialty chemical prices. Regular increase in crude oil prices has further pushed up the prices. Indian manufacturers have also benefited as international companies that have reduced their dependence on China are turning to Indian manufacturers for their supplies.

“Revenue growth is likely to improve sharply to 19-20% this fiscal as compared to the pandemic-free 9-10% in the previous fiscal, driven by recovery in domestic demand, higher realizations on account of rising crude oil prices. Inspired. and export better. Other reasons include Western countries becoming more eco-centric, with production increasingly being outsourced to India. According to Gautam Shahi, Director, Crisil Ratings, India also remains an efficient and cost-effective alternative to China.

As per Crisil report, Indian manufacturers have registered a Compound Annual Growth Rate (CAGR) of 11% in revenue between FY 2015 and 2021, increasing India’s share in the global specialty chemicals market from 3% to 4% .

Also, the increase in capital expenditure should not come as a surprise. Notably, capex will be well above pre-Covid levels. The suggested capital expenditure is much above ₹According to Crisil data, 5,000 crores were spent in the financial year 2020 before the pandemic