Chemical Sector Check - Early Days Yet Despite Uptick In Prices: Nirmal Bang

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Nirmal Bang Report.Key PointsThe trend in chemical prices has seen an uptick of late, reversing the YoY decline we had seen in H2 FY23 and Q1 FY24. This in part is due to the recent increase in oil/gas prices – Brent is up 7.57% month-on-month in July 2023/August 2023. Given the uncertainty as to when the excess supply from China will abate and the subdued global demand outlook for crop protection chemical, this uptick in chemical prices could be transient, and may not sustain.On a positive note, the key freight indices are down 77-90% as per the latest trends. This is likely to partly offset the headwinds caused by carryover of high-cost inventory and the muted pre-season booking of pesticides. Further, the 21.9% YoY decline in Q2-to-date FY24 oil price could imply lower energy costs. Overall, we believe that the custom synthesis manufacturing/contract research and manufacturing services companies with healthy balance sheets, visible order book/growth and new growth engines offer a better risk-reward over the next six months to one year compared to CPC companies.Agrochem CSM leader, PI Industries Ltd. (our top Buy with target price of Rs 4,534) offers new product launches, visible growth in CSM and potential for upside from the scale-up in the newly purchased pharma business. Risks: Delay in CSM order execution, uncertain chemical pricing and China supply and adverse weather due to El Nino.CPC sector biding time for a sustained revival: Healthy progress in monsoon and sowing (especially in rice) besides good soil moisture augur well for the Kharif season, as per the earnings calls of CPS stocks we tracked post Q1 FY24 results..Click on the attachment to read the full report: .Chemicals Sector Check - Some Respite In Pricing Pressures: IDBI Capital.DISCLAIMER This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Chemical Sector Check - Early Days Yet Despite Uptick In Prices: Nirmal Bang

The trend in chemical prices has seen an uptick of late, reversing the YoY decline we had seen in H2 FY23 and Q1 FY24.

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