Indian chemical stocks are still the FPI darlings. Will they withstand the US tariff heat?
In July 2025, overseas investors pumped in $130 million into Indian chemical and petrochemical stocks, following a hefty $278 million in June, showed data from NSDL. A year ago, FPIs had pulled out net equity investment worth $61 million from the sector.
The telecom equipment space topped the charts for FPI inflows in July, attracting $570 million in net equity investment, followed by metals and mining with $388 million, and food, beverages and tobacco at $175 million.
While the chemicals and petrochemicals sector saw 11 consecutive months of FPI buying, the telecom sector witnessed a steady inflow of foreign money since December. Metals and mining, along with food, beverages, and tobacco, attracted foreign inflows only in July.
According to NSDL, FPIs were net sellers in the Indian equity markets in July, with a total outflow of ₹17,741 crore.
Investors in chemical companies have been rewarded handsomely. In the year to 12 August, dye maker Indochem topped the list, delivering 308% gains, while specialty chemicals producer Camlin Fine Sciences gave 115%. Pigment manufacturer Kesar Petroproducts (63%), aroma and fragrance maker Privi Specialty Chemicals (59%), and life sciences-focused Anupam Rasayan (52%) also posted stellar returns.
However, in the last one month, most chemical stocks have come under pressure because of US President Donald Trump's tariffs.
Hikal slipped 20%, while Castrol India and Laxmi Organic eased 4%, Fine Organic and Gujarat Alkalies fell 5%, and Alkyl Amines, Archean Chemical, and Deepak Nitrite were down 7% each.
Linde India dropped 8.5%, Atul 10.5%, and Fairchem Organic 12.5%. Losses were steeper for Aarti Surfactants, Aarti Industries, and Vinati Organics at 15% each, Clean Science at 17%, and Camlin Fine Sciences, plunged 24%.
A few names, however, swam against the tide: Bliss GVS Pharma gained 13%, Tatva Chintan rose 9%, Tata Chemicals added 5%, Sudarshan Chemical climbed 19%, and TGV Sraac surged an impressive 32%.
Now the key question facing investors is whether the momentum in chemical and petrochemical stocks can hold up after US President Donald Trump announced an additional 25% tariff on India, taking the total hit to a hefty 50%.
According to the Indian Trade Portal, India is the sixth-largest chemical producer in the world and the third-largest in Asia. It ranks 14th in global chemical exports (excluding pharmaceuticals), contributing 2.5% to global chemical sales.
Ratings firm Icra, in its August report, said 60% of India's agrochemicals output is exported, with the US accounting for 18% in FY2025. The US also sources agrochemicals heavily from the EU, Mexico, and China; while the EU now faces a 15% tariff, Mexico's rates match India's, and China continues to face 30%.
India is a key US supplier of dyes, pigments, and other chemicals alongside China, the EU, and Mexico. However, tariff advantages for the EU and narrowing gaps with China could increase pricing pressure on Indian exports.
The hope that pharma and healthcare might escape US tariffs had sparked some cheer, spilling over into a rally for chemicals and petrochemicals earlier this year, said Nilesh Ghuge, research analyst at HDFC Securities. But that optimism may be short-lived if Trump goes ahead with extra tariffs, he warned.
'Until there's clarity, investors might be better off sitting on the sidelines rather than jumping in head-first." Ghuge sees volumes inching up but says prices may take another couple of quarters to recover.
Research co-head at PL Capital, Swarnendu Bhushan, also remains cautious on the sector and does not see a rebound anytime soon. 'Margins are shrinking, volumes are inching up, but prices aren't recovering, with Chinese overcapacity dumping extra supply into the market," he said.
Also Read: China has now disrupted specialty chemical market. Startups step up
Tariffs could shave off some exports, especially of more commoditised products, said Prashant Vasisht, senior vice president and co-group head, corporate ratings, Icra. Commodity chemicals are high-volume, standardized products—like sulfuric acid or ethylene—made for global and domestic markets. They serve as basic raw materials for other industries and show little difference from one producer to another.
"However, certain speciality chemicals could bear the brunt of tariffs and still maintain volumes," he added.
Pricey or fair deal?
'Valuations remain lofty for most chemical and petrochemical names, especially with Chinese dumping squeezing margins, but there are still a few decently priced pockets that could quietly deliver alpha," said Ghuge of HDFC Securities.
Valuations are well above their five-year averages. Tatva Chintan, for instance, is trading at a sky-high price-to-earnings (P/E) of 615.67 versus its five-year average of 477.37. Tata Chemicals (42.6 from 31.48), Gujarat Fluorochemicals (58.02 vs 44.16), Deepak Fertilisers and Petrochemicals (43.52 vs 30.72), Archean Chemical (34.98 vs 25.67), SRF (60.30 vs 47.88), and Aarti Industries (55.50 vs 41.61) are also sporting richer-than-usual multiples.
Market participants point to massive capacity additions in China and a weak global economic outlook as key headwinds, while the positives lie in a healthy domestic demand outlook and a gradual shift in global supply chains towards India.
Also Read: Why Coromandel International has thrived while many fertilizer companies have struggled
Scope for upgrades
Ambit Asset Management's July newsletter noted that after the boom years of FY20–22, the market expected strong growth for FY22–25, projecting a 23% earnings CAGR and 25% median Ebitda margin. Instead, revenue fell at a -3% CAGR and margins dropped to 13% in FY24, before recovering to 18% in the second half of FY25 as businesses stabilised.
Looking ahead, after the weak FY22-25 period, the market now expects only a modest recovery—18% revenue CAGR over FY25–27, with average Ebitda margins improving slightly to 18% in FY27 from 16% in FY25.
'We believe there is significant scope of upgrades to these assumptions given global channel inventory is at a 5-year low, which suggests restocking led demand; recent pricing up-move indicates strong improvement in margins as well, and resultantly, we believe there is scope for upgrades," said Ambit Asset.
Also Read: India eases quality control norms on key chemicals imported from the US, China
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
&w=3840&q=100)
First Post
27 minutes ago
- First Post
Suhail Chandhok exclusive on growing a team in non-cricket market: 'We are a nation that loves heroes, not necessarily the sport'
U Mumba CEO and TV presenter Suhail Chandhok, in this exclusive chat with Firstpost, spoke about the challenges he faces as sports administrator, India's sporing culture and the future of Indian sports. Suhail Chandhok has worn many hats, including those of a cricketer, an actor, a TV presenter, and now CEO of U Mumba. However, he says that the transition to the administration side of this industry was 'natural' for him. In an exclusive interview with Firstpost, Suhail spoke about his journey, the challenges of being a young CEO, and his belief in building the right team culture. His love for sport began on the field, and when his playing days ended, he found a job as a TV presenter/commentator, doing stints for the Pro Kabaddi League, the Indian Premier League, and other sports. Now, Suhail has moved to the business side with kabaddi becoming his launchpad. STORY CONTINUES BELOW THIS AD On the financial side, Suhail revealed that sponsorship for non-cricket leagues hovers between Rs 3.5-5 crore a season, but he stressed that media rights are the real game-changer and play a big role in revenue generation. Suhail urged that more media platforms must back Indian sports. 'I think sponsorship is always something that is going to dictate a measure of success in some sense but I think that's not necessarily right, because sponsorship is only one metric of value. For instance, yes, you know, some teams are more successful than, let's say, three or four other leagues, whether it be volleyball, kho-kho, tennis, or badminton.' 'However, I think there is value that each sport brings to its own niche. Having said that, it has roughly been around the four to five crore mark in terms of sponsorship. That goes up and down, it yo-yos between three-and-a-half to four-and-a-half, five crores per season. 'Media rights are a big unlocking value, and I think we have to understand that media rights will always drive the overall value of a sport, of a franchise, of a team. That will continue to dictate value. However, that's where the market plays a big role. Today, we're again heading into what is potentially a monopoly market of Jio and Star coming together and I do hope that unlocking value continues. STORY CONTINUES BELOW THIS AD Suhail also warned about the growing trend of big conglomerates controlling all the stakes in major sporting leagues in India, especially in terms of broadcast. 'We shouldn't lean on a monopoly market. I do hope to see more and more media houses come in that want to house sport, whether it be global entities entering India, like Netflix and the WWE deal. It's a great dictate for what the future of sport might look like. When you look at the effect that a Formula 1 movie has had, or a Drive to Survive show has had, or WWE now being on Netflix, I do hope more global platforms look at Indian sport and Indian leagues as a potential. I think the next ten years are going to be very strong for India, and more platforms need to enter the market.' Suhail on taking PKL to next level The Pro Kabaddi League (PKL) has already grown into one of the biggest sporting leagues in India, second only to the IPL in stature. Suhail opened up about the gaps that can be filled by the PKL organisers to make the league even bigger in India. 'I think listening to the franchises' needs a little bit more is important. All of us – all 12 teams – are looking to work with the PKL to grow the sport. What we need to do is unlock the true value of the sport. While the league, as an entity, is largely owned by the broadcaster, I think we still need to separate the two and work with the teams, the stakeholders of the sport, and others who are genuinely trying to promote it.' STORY CONTINUES BELOW THIS AD 'We must also clamp down on any rubbish that's going on. We need to be very stern and focused on the progress of the sport in one clear direction. The league has done a fabulous job of building it to where it is today, but now it's the league's responsibility to take it up an extra notch. How do we commit to the future of the sport when we already have such strong stakeholders?' 'In terms of stature, I think only the IPL is a rival. We have the Kotak family, the Screwvala family, the Adanis, JSW, the Bachchans, Capri Global, and other private investors in the mix. This is a strong core group of team owners who are not looking for a quick exit, which means the sport is in safe hands. When the sport is in safe hands, it's our responsibility to stay true to it, unlock its value, and not stunt its growth.' STORY CONTINUES BELOW THIS AD Suhail believes that it is important to support new entrants because it will only help the sport grow. 'It's equally important to support others around the sport who are trying to do good for it. At Elev8 India Sports, we follow a 'copyleft' policy – we want to see more and more people come in. It's not about copyright and blocking; it's about allowing people to enter, contribute, and help the sport grow. Kabaddi is still at a nascent stage, so we need more people to talk about it, work for it, and build it up. Blocking new entrants will only curb enthusiasm and growth.' Suhail stressed that growing the sport is not just the league's job, but a shared duty for everyone involved. 'Everyone has a responsibility to help the sport grow. At the same time, we must educate players about what is right and wrong. Addressing certain issues today will help the sport clean up its act for the future as well.' STORY CONTINUES BELOW THIS AD Suhail on issues non-cricket leagues face Suhail also talked about the challenges that a growing sport like kabaddi faces. He said that when big money enters a sport suddenly, it can sometimes distract players from the true motivation of why they started playing in the first place. 'When a lot of money comes into the sport very very quickly, players stop understanding what the true value of why they are playing this game. You start to play for the auction or you start to play for your personal value rather than the value of a team. I think it's only very natural. It happened with the IPL when there was sudden unlocking of value where players started playing for their franchises rather than playing for their nations. Rather than committing to the calender of a country, they started playing where the money was. That is happening with kabaddi as well and I think helping players understand why they are playing this sport, why the sport has give them so much.' STORY CONTINUES BELOW THIS AD 'So, player education is important. At Elev8 India Sportz Yuva Series we do a lot of financial literacy, we do a lot player psychology, we work with players understand anti-corruption, what their true value is.' Suhail on positive and negative trends in non-cricket leagues Suhail said the most promising sign is that Indian sports culture is slowly expanding beyond cricket. However, he pointed out that India's tendency to idolise individuals rather than the sport itself is a major issue. 'I think the trend is that we are leaning towards not just cricket. And I think that's something that has to happen for a country to become a true sporting nation. Firstly, there's one big challenge in India: we are a nation that loves heroes and not necessarily the sport. When I worked on the badminton league, people would rush to watch your PV Sindhu versus Saina Nehwal.' 'But when you had a Carolina Marin facing off against a world number two and number one at the time, the stadium would be empty. So we appreciate heroes and not the sport, and I think that needs to change for India to take steps towards becoming a true sporting nation. However, look at the flip side — while we turned up in large numbers to watch a javelin event, we may have all turned up in 10,000 numbers to watch a Neeraj Chopra.' STORY CONTINUES BELOW THIS AD 'But when you get there and watch Neeraj Chopra, you start to understand what the sport of javelin even is. So I think it takes a hero to bring about awareness to a sport and vice versa. But at the same time, I do hope that while 10-15,000 people turned up to watch a javelin event in Bangalore — and I think that's a sign that India is heading in the right direction — I hope that tomorrow, when Neeraj Chopra is not necessarily the only guy that's there, at least 5,000 people do turn up to watch a javelin event.' 'And I think that's going to be the hallmark of success going forward. Because while we are talking about a 2036 Olympic bid, I hope that we understand that we have to build sporting culture, and that starts with everyone playing a sport. When you play a sport, you'll automatically tune into watching a sport. And I think that's what I want for all of us to do.' 'But I think the trend is very positive — more and more people are taking to a tennis court, a badminton court, a table tennis table, a pickleball court, a paddle court, playing football with their friends, playing kabaddi with their friends in their neighborhood.' Suhail on turning down offers from IPL teams Suhail revealed that he turned down management offers from teams in three different sports, including IPL franchises, before joining U Mumba at what he called 'the right time.' 'I unfortunately can't give you a full disclosure on those. All I will say is it's been across three different sports. I think the timing was such that it came at the right time with kabaddi. Since then, there's been a couple of others as well, including IPL teams. I will come back to I guess cricket in many ways and forms was one opportunity that, that came and went. I just thought that it would've taken a much bigger commitment in terms of time, and I don't think I would've been able to do broadcast at all if I took on a slightly larger commitment as well,' he said. 'Uh, but also I think it was the ability to do it at the right time, right? And I've always been someone that believes that things happen when they need to happen. And I think, you know, saying yes to the right opportunity is absolutely critical as well. There have been opportunities not just in India, but outside of India as well — again, very exciting stuff. And it's always nice to know you're wanted, right? I think that means you're doing something right.' Suhail on his equation with U Mumba owner Ronnie Screwvala While Suhail doesn't own a stake in U Mumba, he has full autonomy in running things as a CEO. He also acknowledged that he leans on his father-in-law, Ronnie Screwvala (owner of parent group U Sports), for advice related to the finances of the team. 'Unfortunately, not (on being asked if he owns a stake in U Sports). I am purely here as a consultant and a CEO. But look, I think there are positives and negatives to being so closely related to a franchise and to the owner of a team, especially when someone is of Ronnie's stature as well. I think he's an extremely hard taskmaster, and I think with that comes two sides, right? You have to have a great deal of transparency and honesty with yourself and, therefore, with him as well, and I was very clear about it when I took on the role." 'I think there's even more pressure when you take on a role where you're so closely related. There's so much more that you have to have in terms of belief so that you can put aside anything that anyone could potentially say. The good thing is that everyone knows I come in with a lot more sporting knowledge than many others here, and I think that for me was the number one conversation I had with Ronnie. I said, 'You know what? If it's a business decision, if it's something related to finance, I want to make sure that the door to you is open and I can come and have a chat and get the advice I need from you. But when it comes to sporting decisions, they have to be mine and mine alone.' And, you know, to this date, he's honoured that.' 'But at the same time, when it comes to the business side of things, I have the ability to tap his brain, and I think that's something wonderful to have. So while there is the added pressure of that, I think when you have the conviction of knowing you know the subject better than anyone else, you go in with that confidence.'
Hans India
27 minutes ago
- Hans India
PM Modi raises pitch for ‘Samriddh Bharat'
New Delhi: Prime Minister Narendra Modi on Friday gave a clarion call for making a "Samriddh Bharat" by becoming self reliant in fields ranging from fighter jet engines to energy and Artificial Intelligence, as he announced a task force for next generation reforms, GST changes as big gift for Diwali, and a state-of-the art defence shield dubbed "sudarshan chakra." Modi's consecutive 12th Independence Day speech was focused on the theme of "aatmanirbharta" (self-reliance) at a time India and the world is facing growing US protectionism, as he highlighted the rising global selfish interest. "We should not waste our energy on shortening the line of any country. We have to make our line longer with full energy. The world will acknowledge our mettle if we can do it. (kisi doosre ki lakeer chhoti karne ke liye apni urja hamein nahin khapaani hai. Hamein poori urja ke saath hamari lakeer ko lamba karaa hai. Hum agar apni lakeer lambi karate hain to duniya bhi hamara loha manegi.)," Modi said in his 103-minute address from the ramparts of Red Fort on the country's 79th Independence Day. Citing his 25 years of experience as the head of a government, he said, "If we choose this path, then no selfish interest will ever be able to entrap us." Modi's longest Independence Day address for any prime minister was peppered with several announcements, including a national deep water exploration mission for self-reliance in energy and a high-powered demography mission to deal with the "serious crisis" of demographic changes effected by infiltrators. His sweeping call for "swadeshi" (Made in India), self-reliance and innovation in a gamut of sectors, including semiconductors, social media, fertiliser and pharma, came amid a strain in the country's ties with the US, with President Donald Trump doubling tariffs on Indian imports to a whopping 50 per cent after singling out India for purchase of Russian oil to pressure it on trade. Sporting a saffron turban, Modi, however, made no direct reference to the issue as he doubled down on his emphasis on self-reliance and "swadeshi". The task force on reforms will make time-bound recommendations for adapting India to become developed by 2047, he said. "It is the call of the hour that we need not fret in the times of crisis but should work to improve our abilities and accomplishments," he said. Indian manufacturers' mantra should be "daam kam, dum jyada" (less price, better quality), he added. India can do it, he said noting that toy producers have begun exporting after he had in a 'Mann ki Baat' episode called for boosting domestic production and the need for stopping their import. The prime minister likened his call for "Samriddh Bharat" (prosperous India) to the freedom fighters' goal of "Swatantra Bharat" (independent India).
Hindustan Times
27 minutes ago
- Hindustan Times
'May have to think...': After meeting Putin, what Trump said on tariffs for countries buying Russian oil
US President Donald Trump on Saturday said he may have to think of retaliatory tariffs on countries buying Russian oil in two to three weeks, but doesn't have to do so right now. US President Donald Trump speaks during a joint press conference with Russian President Vladimir Putin.(AFP) His remarks came shortly after he concluded his high-stakes meeting with Russian counterpart Vladimir Putin in Alaska, and briefly addressed the media alongside him. "Well, because of what happened today, I think I don't have to think about that (tariffs)," Trump reportedly told Fox News' Sean Hannity after the meeting. "Now, I may have to think about it in two weeks or three weeks or something, but we don't have to think about that right now. I think, you know, the meeting went very well." Trump had announced last month that he would impose secondary sanctions on countries doing trade with Moscow, as he threatened 100 per cent tariffs on Russia.
