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Crisil Ratings in its latest report has said that agrochemical players are likely to witness 15-17 per cent revenue growth in FY23, mainly driven by strong global and domestic demand. It said revenue is expected to grow by 10-12 per cent in the next financial year (FY24) as India continues to benefit from the China+1 strategy of global players and key molecules going off patent.

According to the report, higher operating leverage, derived from better cost absorption, will help sustain operating margins at 15-16 per cent in FY23 and FY24, despite input prices remaining elevated. Capital spending will continue at similar levels as in the past, but elongation in the working capital cycle will result in higher borrowings, as per the report. Export revenue is seen rising 18-20 per cent this fiscal, with the US dollar appreciating 9 per cent so far and volume growing as global players continue to de-risk their China dependency. Next fiscal, exports will likely grow 12-14 per cent as players keep up capex with an eye on molecules worth $4 billion going off-patent over the next two years. As a result, exports will remain the major contributor to the agrochemical sector accounting for 53 per cent of the total revenue.

Meanwhile, it said the domestic segment is expected to grow 12-14 per cent this fiscal, driven by a near-normal monsoon, higher realisations and improving farm sentiment. If a normal monsoon continues and the government focuses on improving farm incomes, the domestic segment will grow 10-12 per cent next fiscal.