As many as 85 equities from the chemical sector are still down more than 25% from their respective 52-week high prices at a time when the benchmark equity indexes BSE Sensex and NSE Nifty are hanging around record high levels. Market participants, however, are positive on a few of them because they believe that India is now on stable ground and that further investment momentum would further accelerate development.
Vikas WSP took the top spot on the list as the biggest loser, falling 68%. Compared to its 52-week high of Rs 6.01 reached on January 12, 2022, the company’s shares fell to Rs 1.90 on November 30, 2022. Additionally, from their respective 52-week highs, Deepak Polymers, Omkar Speciality Chemicals, Mangalam Organics, Sreechem Resins, Seya Industries, Valiant Organics, Daikaffil Chemicals India, Resonance Specialties, and Vivid Global Industries have all fallen more than 50%.
Centrum Broking said it maintains its positive outlook on the industry and that India’s tale of expanding domestic demand is still valid. Due to low labour costs, regulatory compliance, supportive governmental changes, excellent technical or synthesis skills, and Indian entrepreneurs’ desire for a worldwide footprint, it thinks India will continue to be a favourable location for chemical exports.
Over the previous ten years, the industry has already increased an investment of Rs 1 lakh to up to Rs 4 crore. Among the top gainers, Jyoti Resins shares increased 43,475.82% from Rs 3.03 on November 30, 2012 to Rs 1321.80 on November 30, 2022. It was followed by Tanfac Industries (up 7,335%), Sadhana Nitro Chem (up 22,743%), Paushak (up 11,672%), Alkyl Amines Chemicals (up 9,908%), Deepak Nitrite (up 8,055%), and Navin Fluorine International (up 7,055%).
Aside from the China+1 strategy, other initiatives in subsequent years, such as a drop in the corporate income tax rate in 2019, a reduction in customs duties, and the introduction of BIS standards, among others, helped the chemical sector expand organically throughout the preceding decade. Centrum Broking said, “We think more policy assistance from reduced tax rates for newly established firms at 15%, development of PCPIRs, availability of feedstock, and anticipated PLI scheme in chemicals will stimulate growth for the chemicals industry.
Market observers also think that the government’s emphasis on capacity reductions, environmental preservation, and a shift toward reducing carbon footprint would provide issues for the Chinese chemical sector. The Indian chemical industry has benefited over the last ten years and is now well-positioned to service the global market.
With a target price of Rs 716, Centrum Broking is bullish on Aarti Industries given the state of the market. Additionally, it is optimistic on Deepak Nitrite (target price: Rs 2,325), Galaxy Surfactants (target price: Rs 2,749), Gujarat Fluorochemicals (target price: Rs 4,376), Navin Fluorine (target price: Rs 5,244), SRF (target price: Rs 2,624), and Vinati Organics (all at Rs 2,624).