Updated on 21 Sept 2016
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Speciality chemicals can be next multi baggers
India's speciality chemicals industry, which is valued at nearly $25 billion, delivered double-digit growth in the last five years and it is seen as one of the next mega-trends that investors can bet on
The industry accounts for a marginal 3 per cent of the global specialty chemicals market. It delivered 13 per cent growth over the past five years, primarily led by domestic consumption, Phillip Capital said in a report.
Going ahead, India's large population base with lower per capita consumption of chemicals and relatively strong GDP growth outlook of 7-8 per cent over the next few years will sustain healthy domestic growth.
There are many companies in this sector but dyes and pigments are the most immediate beneficiaries under the speciality chemicals theme.
The global chemical industry is valued at about $3 trillion in 2001. It moved to $4.5 trillion recently. Now, $4.5 trillion is way bigger than IT, way bigger than pharma and many other global sectors
The government's 'Make in India' initiative will facilitate the industry with common infrastructure and a consequent rapid flow of FDI into the sector which could deliver up to 30 per cent CAGR over FY13-15 to US$ 2.67bn, according to an estimate.
Stocks to watch:
Stocks in the chemicals sector have managed to outperform benchmark indices by a wide margin. As much as 15 stocks on the BSE have more than doubled investors wealth in the last 1 year which includes names like Ganesh Benzo, IOL Chemicals, Gujarat Alkalies, Kilpest India, Jyoti Resins, Super Crop Safe, Balaji Amines, Meghmani Org, Deepak Nitrate etc. among others.
Although the Indian specialty chemicals market is well represented by global MNCs such as BASF, Clariant, Dow Chemical, Huntsman, AkzoNobel, Mitsubishi Chemical Corp, Croda, Du Pont, Henkel, Wacker, Evonik, Syngenta, and Solvay, barely a handful of companies are large and listed.
However, listed companies such as SRF, Aarti Industries, Vinati, Meghmani, Camlin Fine Sciences, Atul are among top bets of domestic brokerage firm Phillip Capital.