chemical shares: 11 chemical shares down as much as 45% from peak; must you keep invested?



One of many sectors that emerged strongly when it comes to earnings progress in addition to an funding theme on Dalal Road has been specialty chemical substances.

Nonetheless, the volatility in fairness markets this yr, triggered by the hawkish financial coverage measures by central banks amid spiralling inflation have seen shares on this house lose some sheen.

11 shares have seen a double-digit correction from their 52-week highs, examined earlier this yr.

The correction in shares have come at the same time as corporations have reported robust progress in earnings within the final two quarters, weathering the spike in uncooked materials costs.

Firms throughout the board have reported excessive double-digit progress within the topline within the final two quarters, and most of them managed a double-digit progress even within the bottomline.

“We predict loads of Indian corporations now have the dimensions, and steadiness sheet, and have been doing loads of work in enhancing their product combine in the direction of extra specialised merchandise,” mentioned

Arpit Agrawal, co-founder of the PMS arm of


On condition that corporations are on observe to finish most of their present growth plans in FY24 at the same time as they’ve lined up new capex for future progress, provides strong outlook for progress,

Securities mentioned in its report.

The speciality chemical substances business advanced considerably over the previous 3-4 years and new alternatives emerged attributable to China+1 and Europe+1 methods taking part in out globally.

Elevated restrictions in China attributable to environmental considerations and closure of a number of items throughout the nation opened up alternatives for Indian corporations. Additional, the challenges in Europe amid the warfare between Ukraine and Russia has added to the alternatives for the businesses.

“The underlying demand continues to be very robust for a corporation like SRF or

and even’ll proceed to have income constructive surprises within the coming quarter,” Chakri Lokapriya, managing director and chief funding officer at TCG AMC advised in a dialog with ET Now.

What ought to traders do?

On condition that the long-term progress potential for the sector stays buoyant, analysts suggest staying invested within the sector and utilizing the dip so as to add high quality shares.

Lokapriya thinks it’s price shopping for again into these shares as their earnings have been upgraded for each FY23 and FY24.

is a robust wager for Motilal Oswal within the specialty chemical substances house.

“Demand for the merchandise stays robust and the administration expects 2HFY23 to be robust too. We’re constructive on the expansion prospects of the corporate and Vinati Organics stays a excessive conviction thought for us,” it mentioned in its report.

Chemical substances is among the many high 5 most invested sector for a number of mutual funds. In October, Kotak Mutual Fund purchased Tata Chemical substances’ shares price Rs 475 crore. DSP Mutual Fund additionally has a major publicity to the sector, with an over 9% weight.

So, the message out on the road for the sector is “down, however not out”. One would see the chemical response yielding constructive outcomes quickly!

(With information inputs from Ritesh Presswala)

(Disclaimer: Suggestions, options, views and opinions given by the specialists are their very own. These don’t symbolize the views of Financial Occasions)

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