Chemicals & Petrochemicals share price target

In Q3FY25, volume growth remained a primary driver for the sector, however, price realisation has
been under strain due to sluggish global demand, increased competition, particularly from China,
and ongoing global uncertainties. In Q4FY25E, we anticipate that revenue growth for most companies will be driven primarily by higher volumes, with limited margin expansion owing to continued competitive pricing pressure.

In Q3FY25, we observed low teen YoY revenue growth and slight expansion in EBITDA margins for our coverage companies, but overall numbers were below our estimates across the board.

In Q3FY25E, we expect double-digit YoY revenue growth from the specialty chemical companies in our coverage. The revenue is expected to grow 18.4% YoY and 2.9% sequentially.

In Q2FY25, we observed positive YoY revenue growth coupled with expansion in YoY EBITDA margins for most of our coverage companies.
Double-digit YoY volume growth was the primary driver of top-line performance, although price realizations remained flat or experienced a slight decline for the majority of companies.

In Q2FY25E, we expect double-digit YoY revenue growth from the specialty chemical companies in our coverage. The revenue is expected to grow 13.2% YoY and 4.1% sequentially.

Indian specialty chemical companies are currently witnessing normalization of inventory destocking, which has been a major challenge over the past few years.
We observed positive YoY revenue growth for most of our coverage companies.

We observed positive YoY revenue growth for most of our coverage companies; however, a decline in profitability margins continued.
Volume growth was the major driver for top-line growth, with demand picking up in specific end-customer segments.

In Q1FY25E we expect YoY double digit growth from the specialty chemical industry. The revenue is expected to grow by 13.6% YoY and 2.1% sequentially for the chemical companies under coverage.

Our top positive plays are: Archean Chemical Industries Ltd; PI Industries Ltd; Praj Industries Ltd; Mold-tek Packaging; Pitti Engineering

We observed a strong sequential increase in both top-line and profitability margins for the majority of our coverage companies.
The destocking situation has slightly improved, with several companies, including Supreme Petrochem and Ami Organics, experiencing double-digit YoY volume growth.