India Farm Inputs & Chemicals: Challenges visible across pockets

  • 24 Feb, 2023 |
  • 10:31 AM
  • As anticipated, several chemical companies reported sluggish Q3 earnings at the outset of 2023. Comments offered by several companies reiterate IIFL Securities’ cautious view on the sector, with a prolonged recovery.

Domestic agro chemicals saw limited revenue growth, owing to excess inventory in channel. While Rabi acreages progressed steadily, inventory liquidation would be critical for the ease of working capital. SRF, NFIL, PI and ANURAS are seeing tailwinds from buoyancy in global agchems. Fertilizer companies witnessed elevated finance costs as subsidy receipts are lagging behind. 

Rabi season a flop show

Despite remunerative crop prices and higher wheat sowing, excess channel inventory affected agchem volumes. Few companies took price hikes to pass elevated input costs. Domestic growth was the strongest for BESTAGRO, CHMB and UPL (includes Advanta Seeds). Domestic businesses of RALI and PI were muted during the quarter. The exports of ANURAS and PI grew significantly YoY. ASTEL and CRIN saw challenges in exports.

Mixed quarter for Chemicals

SRF’s Chemicals business, NFIL (driven by CDMO), AETHER and NEOGEN were outperformers in Q3. However, FINEORG and bulk chemical companies like TTCH (India business) and DFPC experienced moderation in profitability. Despite this, global supplies for refrigerants (SRF, NFIL, FLUOROCH) and soda ash (TTCH) remain tight. Re-opening of China would be critical for PVC (CHEMPLAS), caprolactam (GSFC) and phenol (DN).

Pressure evident for chemical exports beyond agchems

As cited in IIFL Securities’ note Outlook 2023 (, there are clear signs of weakness on pricing and margins, especially for exporters beyond agchems/pharma intermediates. Comments offered by NFIL, ATLP and ARTO indicate challenges to persist during CY23. While global chemical markets, especially China, are showing initial signs of revival, recovery would be prolonged in the next two to three quarters.

Capex slips into FY24

Ongoing projects for ATLP, DN, PI, FINEORG, TTCH and GNFC are lagging, and appear to be distant from their original timelines. This could possibly lead to downgrades for the expected growth pegged in FY24/25. Nevertheless, several companies are scouting new land parcels to safeguard future requirements. New projects announced in Q3 include SRF’s specialty fluoropolymers project, DN - polycarbonates complex, CHEMPLAS – CSM capex, and NEOGEN - greenfield unit for electrolytes.


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