At a time when benchmark equity indices BSE Sensex and NSE Nifty are hovering at their record highs, 85 stocks in the chemical sector are still down over 25 per cent from their 52-week highs. However, market players are bullish on some of them as they feel that India is now on a solid footing with investment momentum that will further drive growth.
With a fall of 68 per cent, Vikas emerged as the top loser in the WSP list. The company’s shares fell to Rs 1.90 on November 30, 2022, against a 52-week high of Rs 6.01 on January 12, 2022. Daikaffil Chemicals India, Resonance Specialties and Vivid Global Industries have also shed over 50 per cent so far from their 52-week highs.
Maintaining its bullish stance on the sector, Centrum Broking said India’s growing domestic consumption story remains intact. It believes that India will continue to be a favorable destination for chemical exports due to labor cost advantages, regulatory compliance, favorable policy measures, strong technological or synthesis capabilities and the drive of Indian entrepreneurs for global presence.
The sector has already grown an investment of Rs 1 lakh to Rs 4 crore during the last 10 years. Among the major gainers, Jyothi Resins shares gained 43,475.82 per cent to Rs 1321.80 as on Nov 30, 2022 from Rs 3.03 as on Nov 30, 2012. It was followed by Sadhna Nitro Chem (up 22,743 per cent), Paushak (up 11,672 per cent). ), Alkyl Amine Chemicals (up 9,908 per cent), Deepak Nitrite (up 8,055 per cent), Naveen Fluorine International (up 7,335 per cent) and Tanfac Industries (up 6,540 per cent).
In addition to the China+1 strategy, the growth of the chemical industry in the past decade was also systematically driven by some policies in the following years, including the reduction of the corporate income tax rate in 2019, the reduction of customs duties, and the adoption of BIS standards. implementation is included. “We believe that further policy support from lower tax rate of 15 per cent for newly incorporated companies, development of PCPIR, feedstock availability and expected PLI scheme in chemicals will drive growth in the chemicals sector,” Centrum Broking said.
Market watchers also believe that the Chinese chemical industry may face challenges due to the government’s focus towards capacity rationalisation, environmental protection and reducing the carbon footprint. The Indian chemical sector has gained in the last decade and is now standing on a strong footing to serve the global market.
Considering the current market condition, Centrum Broking is positive on Aarti Industries with a target price of Rs 716. It is also bullish on Atul Ltd (Target price: Rs 9,480), Deepak Nitrite (Rs 2,325), Galaxy Surfactants (Rs 2,749), Gujarat. Fluorochemicals (Rs 4,376), Naveen Fluorine (Rs 5,244), SRF (Rs 2,624) and Vinati Organics (Rs 2,451).
