The Indian Chemical Sector is quite diverse. It produces a range of products including petrochemicals, plastics, Pharmaceutical ingredients and paint. Chemical is one of the vital sectors of India in terms of both production and export performance. As per the latest data of Association of Chemical Companies the sector contributes 7% of GDP and 13% of both industrial output and total exports. India owns 2% of Global Chemical Industry and is the second largest player in the Agro-Chemicals in Asia. IndianPharmaceutical Industries rank 4th in the volume and 13th in terms of value production globally. Over the last thirty years, the sector has experienced above average decadal growth rate and enjoyed the distinction of being the fastest-growing sector.
Top Players:
Below is a comparative chart of the top five players of the sector.
The above chart leaves no doubt that when it comes to the Market Capital Pidilite beats all the other players by and large. However, Godrej Industries have the highest sales and total assets among the top five players.
Sectoral Data:
The sector has performed 22% in compared to the Benchmark Index Nifty that stood at 10.71% in a year’s time. The sales have grown by 11%, Net profit by 27% and EBITDA by 31%.
The PE of the Chemical sector stands at the average of 47 while its Price to book ratio is 8 and the Enterprise value/EBITDA (EV/EBITDA) is at 21.
The Sector has the highest shareholding with promoters. The promoter holdings stand at 64% as compared to the FII of 11% and DII of 6%.
The sector’s EBITDA margin stands at 18%, EBIT at 15% and Net Profit After Tax at 9%.
The Game by Mid and Small Caps:
The Mid and small-sized chemical companies have gone up by 20% on BSE due to heavy volumes. Bhageria Industries was up by 20% at Rs. 433, Therumalai Chemicals was up by 19% and was trading at Rs. 533, Chemfab Alkalies share price traded at Rs. 278 with the rise of 18%, IG petrochemicals hiked by 14% and traded at Rs. 191, Pondy Oxides and Chemicals went up by 13% at Rs. 159, Kiri Indistries traded at Rs 323 with the rise of 13% and AksharChem India was up by 10% at Rs. 389. It is obviously clear that the Sector has stolen the limelight today.
The rally is led by the strong earnings growth in the sector in first quarter of financial year 2017. The combined net profit of 105 Mid and Small Cap companies went up by 53% on the YoY basis. Below is a table of Mid and Small Cap companies that rallied 10% and above in today’s trade.
| Company | Gain % |
| THIRUMALAI CHEM. | 20 |
| BHAGERIA INDUST. | 19.99 |
| CHEMFAB ALKALIS | 19.48 |
| MYSORE PETRO | 16.52 |
| POCL ENTERPRISES | 13 |
| I G PETROCHEMS | 12.87 |
| KIRI INDUS. | 12.63 |
| GRAUER & WEIL | 11.9 |
| PONDY OXIDES | 11.19 |
| ULTRAMARINE PIG. | 10.83 |
| SH. HARI CHEM. | 10.07 |
| DAIKAFFIL CHEM | 10 |
Ananth Kumar, Union Minister of Chemicals and Fertilizers have stated that the anticipated growth in the Indian Chemical Sector is 9% per annum to become a USD 226 bn sector from the current USD 147 bn. Since, there is still the scope and potential of growth in this sector.
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