Chemical Sector Q2 Results Review - Excess Inventory, Weak Pricing To Hit Earnings: Nirmal Bang

Nirmal Bang Report

As per industry sources, India crop protection chemical sector may see a tempered performance in Q2 FY25 QoQ, due to reports of excess inventory, pricing pressure and stock returns amid excess supply from China.

One small cap CPC company is reported to have cut growth guidance for FY25.

Our agro-chemical coverage companies are likely to report YoY decline in Q2 FY25 results - barring Sumitomo Chemical India Ltd. which will buck the trend with 38.8% YoY growth in PAT – lead by 20% topline growth and margin expansion.

CSM major PI Industries Ltd. is also likely to see 17% profit before tax growth – but PAT growth will likely be muted due to higher tax rate, as export benefits at Jambusar site are lower YoY.

In UPL, we see weak topline/margins amid weak prices offsetting volume growth in the U.S., persistent Chinese dumping and de-stocking. UPL’s India sales are likely remain subdued due to the internal efforts to improve collections.

We expect weak Soda Ash prices to offset volume growth in Tata Chemicals, and see YoY hit on Coromandel’s Nutrient segment from the year-ago peak.

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