Pidilite Industries, Navin Fluorine Get Ratings Upgrade From Morgan Stanley On Improved Growth Outlook

Morgan Stanley upgraded Pidilite Industries Ltd. and Navin Fluorine International to 'overweight' and 'equal weight' ratings after noting their exposure to agrochemicals. Indian chemical companies will see a constructive volume-growth cycle led by agrochemicals in financial year 2026, according to the brokerage.

It hiked the target price for Pidilite Industries to Rs 5,000 from Rs 3,524 apiece, which implies a 65% upside from current levels. For Navin Fluorine, the target price was raised to Rs 4,160 apiece, from Rs 3,242 apiece. The current target price implies a 8.4% downside from current price.

The cycle will likely support stronger asset runs and operating leverage-led margin tailwinds against demand challenges and weak pricing. This turn in the cycle is expected to herald stronger orderbook growth, faster capacity monetisation, operating -leverage-led margin tailwinds, Morgan Stanley said.

A fresh round of global crop protection volume growth in 2026 and 2027 will likely have multiple implications for India chemicals. Agrochemicals constitute 30–35% revenue across India's specialty chemical portfolios, and exports comprises about half of revenues. Indian chemical producers are the incumbent beneficiaries as legacy offtakes improve, and new products scale up, Morgan Stanley said. Competitive pressures should ease, according to the brokerage.

It estimates double-digit volume growth, underpinning a return to 20% CAGR earnings growth profiles. There is also likely to be 200 basis points rise in return on capital employed, according to the brokerage.

Key risks for Indian chemical companies are volume uptick remaining elusive, which may compound pricing pressures, and delay monetisation and returns expansion, Morgan Stanley said in the note.