Indian chemical companies are anticipating a recovery in profit margins by the second half of fiscal year 2024 (H2 FY24), despite ongoing challenges in the global chemical market. This optimism is driven by increased interest from global companies in sourcing from India, a rising share of specialty chemicals, and robust capital expenditures by Indian chemical firms.
The global chemical market has faced volatility due to factors such as increased competition from China, geopolitical tensions, and fluctuating commodity prices. Despite these challenges, India’s chemical sector remains robust, bolstered by strategic investments and heightened global interest.
Companies like Anupam Rasayan have observed a noticeable trend towards increased outsourcing, with the number of multinational clients rising from 24 to 29 over the past three years. This reflects an uptick in outsourcing partnerships and signifies India’s burgeoning role in the global chemical landscape.
Analysts from SMIFS Limited note that while key export markets such as the US and Europe are currently experiencing slow demand, the worst phase of global destocking in the agrochemical space is likely behind, with normalcy expected to resume soon. They anticipate that the expected recovery in agrochemicals and pharmaceuticals will provide an upward trajectory for Indian chemical companies.
In summary, despite global headwinds, Indian chemical companies are poised for a promising resurgence in margins by H2 FY24, driven by increased global interest, growing prominence of specialty chemicals, and substantial capital investments.
