Top Speciality Chemical Companies In India: Having a diverse portfolio of different industries can only help you in the long run – and India’s chemical industry is one such sector that can potentially give consistent returns in the years to come. But why?
India is the 6th largest producer of chemicals in the world. As of 2019, India’s chemical industry was valued at $178 billion and growing.
Chemicals refer to a broad term for the entire industry – It ranges from dyes, agrochemicals, organic chemicals, petrochemicals and much more.
In this blog, we’re going to put the scope on the Indian chemical industry, as well as the top speciality chemical companies in India.
Indian Chemical Sector – A Brief Look
According to IBEF, India is the world’s largest producer of dyes and 6th largest chemical producer. The industry has a diverse range of products, from petrochemicals to dyes and pesticides. India is also the fourth largest producer of agrochemicals, after the USA, Japan and China.
As of April 2022, India’s chemical production increased to 918,629 MT, not including petrochemicals which reached 1,564,215 MT. Speciality chemicals make up 22% of the chemical/petrochemical sector in India.
Speciality chemicals are chemical products that are used by industries for the production of a wide variety of chemical agents such as adhesives, agrochemicals, polymers, paints and so on.
The list of its uses is nearly endless and unavoidable when it comes to their practicality in daily life.
Top Speciality Chemical Companies In India
Now, let’s take a look at some of the top speciality chemical companies in India!
1. Pidilite Industries
|Share Price||₹ 2,606||Market Cap||₹ 132,473 Cr.|
|EPS||₹ 26.4||Book Value||₹ 126|
|Stock P/E||98.8||Price To Book||20.8|
|Face Value||₹ 1.00||Dividend Yield||0.38 %|
|ROCE||26.1 %||ROE||20.2 %|
|Debt To Equity||0.06||Promoter Holding||69.9 %|
Pidilite Industries is very well known for its flagship product – Fevicol. The adhesive is so well known across India that the word “fevicol” is often used in place of “glue”. The company also has other brands under its banner, including Fevikwik, Dr Fixit, M-Seal and Araldite.
Now let’s look at the financial performance of Pidilite Industries –
With a market capitalization of ₹1,32,473 crores, Pidilite Industries is one of the largest chemical companies in India. It is certainly the biggest company on our list of top speciality chemical companies in India.
Promoter holding is steady and quite healthy at almost 70% in the past three years. Pidilite Industries earns well over 53% of its revenues from adhesives and sealants. As of FY- 2018, their sales stood at just over ₹6,078 crores.
5 years later, their sales in FY 2022 are 9,921 crores. That is an impressive 55% growth in revenues in just 5 years. Profits as of FY-2018 were ₹966 crores and FY-2022 profits were ₹1,207 crores.
Its ROE is a healthy 20.2%, the 2nd highest among the top 5 companies. The Stock P/E ratio is an extremely high 98.8, almost 4 times that of the industry P/E of 26.8. This is the highest difference between industry and company P/E on this list.
Now, coming to the company’s debt position, Pidilite has virtually zero debt, with the lowest D/E ratio (0.06) of all 5 companies. Year to date, Pidilite has given a return of +5.62%.
2. SRF Ltd
|Share Price||₹ 2,500||Market Cap||₹ 74,108 Cr.|
|EPS||₹ 70.9||Book Value||₹ 289|
|Stock P/E||35.3||Price To Book||8.67|
|Face Value||₹ 10.0||Dividend Yield||0.28 %|
|ROCE||24.0 %||ROE||22.6 %|
|Debt To Equity||0.43||Promoter Holding||50.7 %|
SRF is a multi-speciality chemical manufacturer founded in 1970. They manufacture fluorochemicals, speciality chemicals, textiles and coated fabrics. The company has 11 manufacturing plants in India, and one each in Thailand, Hungary and South Africa.
Financials of SRF –
SRF has a market capital of ₹74,108 crores, making it a large-cap chemical company. Promoters of SRF hold exactly 50% stake in the company, and the shareholding pattern reveals that promoters have sold close to 2% stake since September 2020.
Between FY 2018 and FY 2022, sales have more than doubled, from ₹5,589 crores to ₹12,434 crores. Net profits have also grown impressively, from ₹462 crores to ₹1,889 crores.
That is an increase in profitability by over four times, making it one of the fastest-growing companies on our list.
ROE at 22.6%, is the 2nd highest among the top 5 speciality chemical companies. The D/E ratio of SRF is 0.43, which is manageable. But, the company’s D/E ratio is higher than every other company in this blog.
Year to date, SRF has given a positive return of +3.68%.
3. Gujarat Fluorochemicals
|Share Price||₹ 3,872||Market Cap||₹ 42,534 Cr.|
|EPS||₹ 99.6||Book Value||₹ 446|
|Stock P/E||39.3||Price To Book||8.67|
|Face Value||₹ 1.00||Dividend Yield||0.10 %|
|ROCE||20.2 %||ROE||19.6 %|
|Debt To Equity||0.35||Promoter Holding||66.1 %|
Gujarat Fluorochemicals manufacture the working liquid that goes into cooling systems. The fluid is called refrigerant and it is used in air conditioning systems. Besides refrigerants, they also manufacture fluoropolymers, agrochemicals and polymer processing aids.
Financials of Gujarat Fluorochemicals –
With a market capitalization of ₹ 42,534 crores, GFL is a large-cap company.
Promoters hold 2/3rd of the company with a 66.08% stake. However, there has been a decline in ownership by promoters by over 2% since June 2021. Furthermore, promoters have pledged a small percentage of their holdings (3.23%).
Sales have improved significantly since listing in 2019 (₹2,729 crores), to 2022 (₹4,873 crores). Their 3-year sales growth is a healthy 13.2%.
Profits for the same period have not followed the same trend. In 2019, Gujarat Fluorochemicals reported profits of ₹1,246 crores but as of FY-2022, they reported profits of ₹776 crores. As a result, the company has had a negative 3-year profit growth of -15.2%.
The 3-year ROE is also the lowest of all 5 companies at just 6.73%. Even their 3-year ROCE follows the same trend, being the lowest of all 5 companies at 13.81%.
The company has the 2nd highest P/E ratio among all 5 companies (39.33) when compared to the Industry P/E of 26.69.
Gujarat Fluorochemicals has a D/E ratio of 0.35, which is considered healthy. They are almost on par with Tata Chemicals D/E ratio of 0.38.
Year to date, Gujarat Fluorochemicals has given a significant return of 55.6%.
4. Deepak Nitrite
|Share Price||₹ 2,244||Market Cap||₹ 30,607 Cr.|
|EPS||₹ 73.2||Book Value||₹ 245|
|Stock P/E||30.7||Price To Book||9.13|
|Face Value||₹ 2.00||Dividend Yield||0.31 %|
|ROCE||44.5 %||ROE||37.4 %|
|Debt To Equity||0.09||Promoter Holding||45.7 %|
Deepak Nitrite is a 52-year-old speciality chemical company. They manufacture agrochemicals, pharmaceuticals, colourants and rubber. The company was listed in the year 1971 and has plants in Gujarat, Maharashtra and Hyderabad.
Financials Of Deepak Nitrite –
With a market capitalization of ₹30,607 crores, Deepak Nitrite is a large-cap chemical company.
It has one of the lowest promoter holdings, with 45.7% of shares held by them. However, none of the shares has been pledged and there has been very little movement in their shareholding.
As of March 2018, sales of the company were ₹1,651 crores and in March 2022, they reported well over ₹6,802 crores in sales.
Deepak Nitrite has had the highest 3-year sales growth (36.07%) and profit growth (82.04%) among all 5 chemical companies on this list.
Both ROE and ROCE for the past 3 years are the highest among all 5 companies at 40.09% and 41.02% respectively. The P/E ratio of Deepak Nitrite at 30.76, is closer to the Industry P/E (26.69) than all 5 chemical companies mentioned here.
The company also has one of the lowest D/E ratios, at just 0.09. This indicates that the company has significantly low debt.
5-year returns of Deepak Nitrite are a massive 936%, making it one of the best-performing chemical stocks.
5. Tata Chemicals
|Share Price||₹ 1,180||Market Cap||₹ 30,062 Cr.|
|EPS||₹ 61.2||Book Value||₹ 716|
|Stock P/E||19.2||Price To Book||1.65|
|Face Value||₹ 10.0||Dividend Yield||1.07 %|
|ROCE||8.40 %||ROE||7.58 %|
|Debt To Equity||0.38||Promoter Holding||37.98 %|
Coming down to the 5th and final company on our list of top speciality chemical companies in India is Tata Chemicals. Part of the Tata Group, they manufacture soda ash and are also the parent company of Rallis India, which is an agrochemical company.
Tata chemicals manufacture fertilisers, industrial chemicals and even energy products for batteries.
Financials of Tata Chemicals –
Tata Chemicals has a market capitalization of well over ₹30,055 crores.
Tata Chemicals has the lowest promoter holding at just 37.98%. However, promoters have increased their holding from 31% in December 2019 to 37.9% in December 2020.
Since then, there has been no movement in the shareholding pattern of promoters. Additionally, none of the promoter’s shares is pledged which is a positive sign.
Coming to sales, the Tata subsidiary reported sales of ₹10,270 crores in 2018 and ₹12,622 crores in 2022. They have had the lowest 3-year sales growth of just 6.8% among all 5 companies mentioned in this blog.
3-year profit growth is also quite low at just 7.48%.
The 3-year ROE is 19.63% which is a decent return. ROCE for the same period is lower than most companies at just 16.5%. Coming to the debt position, Tata Chemicals has a D/E ratio of 0.38, which is quite healthy.
Year to date, Tata Chemicals has given a good return of 29% so far.
That’s all for this blog on top speciality chemical companies in India. After supply chain disruptions and companies shifting from China to other countries, India is strategically poised to benefit from the chemical sector in the future.
Apart from the companies mentioned above, some other speciality chemical companies to watch out for are Vinati Organics, Navin Fluorine, Fine Organic and Atul Ltd. Have any stocks you would like to add to this blog? Let us know below. Happy Investing!
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