Chemical Companies: Major Chemical Companies Post Strong Q1 Earnings Despite Cost Pressures

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Mumbai: SRF, , , , , , and are among chemical companies that surprised analysts with better-than-expected results for the June quarter, with sales up 40% on average and profits up 30% . Volumes, both domestically and internationally, were robust.

Several companies in the sector are confident of sustained growth, while a few have also raised their investment plans further.

Earnings growth was supported by strong absolute revenue gains despite Ebitda margin contraction due to volatility in commodity prices, which have now started to weaken, suggesting further margin expansion if the downward trend in input costs continues.

“Accomplishments are high due to the low base and high input costs, and the industry has also benefited from higher demand for certain products, seasonal gains and a shortage of global supply,” said Vinod Nair, head of research at . “We expect the specialty chemicals sector to do well in the long term given the high investment in new products, the growing share of value-added products and the emergence of India as a as an additional supply destination.”

SRF recorded consolidated revenue and net profit growth of 44% and 54% year-on-year, respectively. Its management raised the investment forecast for FY23 to ₹3,100-3,300 crore from ₹2,500-2,700 crore earlier.

Gujarat Fluorochemicals reported growth of 46% and 101% in revenue and net profit, respectively, in the June quarter, on the back of an improved margin profile driven by higher prices.

Solar Industries delivered a strong performance with 96% revenue growth and 81% profit growth, driven by higher volumes and better execution.

“Specialty and complex chemical companies, with large value-added product portfolios, have experienced continued growth in domestic demand both due to higher consumption and also an import substitution factor at play. “said Narendra Solanki, head of research at Anand Rathi Shares. “In international markets, demand has remained robust, especially after the China problem a few years ago and now due to the war in Ukraine.” He added that Germany, historically a chemical manufacturing hub for the EU, is experiencing an energy crisis that is making Indian companies “more competitive”.

Atul delivered strong revenue growth of 36.7% year-on-year and strong margin expansion of 312 basis points to 18.1%, reflecting stronger-than-expected growth in the life sciences chemicals business life.

delivered 39% year-on-year earnings growth, driven by a record blended EBITDA margin.

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