homemarket NewsBull Vs Bear: Why Elara's confidence in specialty chemicals contrasts with Nirmal Bang's caution
Bull Vs Bear: Why Elara's confidence in specialty chemicals contrasts with Nirmal Bang's caution
The speciality chemicals industry stands at a crossroads, with conflicting viewpoints shaping its near and long-term future. While Elara Capital envisions a swift recovery and growth, Nirmal Bang exercises caution, emphasising the resilience of select players in specific sectors amid the overarching challenges.
The Indian speciality chemicals industry has faced many challenges in recent quarters, grappling with inventory destocking, subdued global demand, and pricing pressures. Economic downturns in key markets like the US and Europe, along with increased competition from Chinese suppliers, have significantly impacted Indian exporters.
While some experts now expect the tide to turn for the industry, some believe the worst is not over yet.
Brokerage firm, Elara Capital has changed its stance on the industry from 'cautious' to 'bullish'. Analysts at the broking house expect the destocking woes to subside by quarter three of the current financial year, with the first glimpses of growth anticipated in the fourth quarter.
Elara predicts a full sectoral revival in FY25 led primarily by the flourochemical segment.
The global four-year valuation cycle for chemicals hints at a potential bottom in the second half of FY24, Gagan Dixit of Elara Capital told CNBC-TV18.
Elara's change in stance is based on its analysis of the performance of over 180 global chemical companies over the past 16 years.
Elara expects Navin Fluorine and Vinati Organics to be major gainers of the revival.
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Brokerage firm Nirmal Bang, on the other hand, is still cautious in the near term. They believe only select players may endure in the long run.
Nirmal Bang foresees potential destocking challenges persisting for generic agrichemicals and pharmaceuticals over the next one to two quarters.
Specialty chemicals that include specialty polymers, coatings, and electronic chemicals contribute nearly 20% to the chemicals industry in India.
The sector is projected to be worth more than $60 billion by 2026 as urbanisation and industrialisation grow, per an EY report released in June 2023. EY believes there are several factors that would drive the rapid growth. These include an abundance of labour, favourable government policies, easy access to suppliers, and a well-developed infrastructure.
For more, watch the accompanying video
(Edited by : Shweta Mungre)
First Published: Nov 21, 2023 2:38 PM IST
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