Specialty Chemicals - Near Term Headwinds; Long-Term Outlook Intact: Prabhudas Lilladher

Prabhudas Lilladher Report

We hosted 10 specialty chemical companies for our specialty and agro chemicals conference over two days. We are of the view that while sharp correction in prices and muted demand led by global slowdown and de-inventorisation are impacting performance of most chemical companies in the near term, but a normalised and stable price environment augurs well for the sector over medium-long term.

Adverse operating leverage because of slowdown in discretionary end user industries’ demand led to QoQ decline in profitability.

Companies which largely cater to essential end use applications like agro chemicals are relatively better placed.

So also, overall Indian manufacturers are better placed versus European counterparts and are likely to benefit from shift in manufacturing to India over the long term.

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