IGI Logo

Feedstock Volatility Continues to Drive Elevated Realisation

We expect a healthy YoY revenue and net income growth in Q2 FY27E, driven by elevated realisation. However, the Q1FY27 benefit from selling lowcost inventory at elevated price is forecast to largely fade, implying QoQ margin compression as higher-cost raw material flows through. Fluorochemicals is expected to remain the strongest, supported by firm refrigerant gas price (R-32 spreads +8%). Agrochemicals remain under pressure amid below-normal rainfall (13% below normal). Aromatics are likely to remain strong YoY but soften QoQ; the phenol–benzene gap at ~INR 28/kg remains well above Q2FY26 levels (~INR 10/kg), but is down from ~INR 42/kg in Q1FY27. Select dyes & pigments chemicals, such as HAcid, remain outliers as China's safety and environmental curbs have caused a supply deficit. Overall, we expect Q2FY27E to be a healthy YoY quarter, albeit softer sequentially.

We remain positive on India’s USD-234 Bn chemicals sector, which is expected to rise at ~8.4% CAGR. This is supported by China+1 diversification, import substitution, shift to value-added chemicals, Europe’s structural cost disadvantage and India’s tariff advantage over China (13% vs 28% in the US; 0% vs ~13% post EU-FTA in Europe). We see BESS, explosives, semiconductors, refrigerant gases, dyes & paints and agrochemicals to be key sub-segments in focus

We believe TANF and FTXC are fundamentally well-positioned for longterm growth.

Strong Refrigerant Gas Demand Keeps R-32 Spreads Elevated

Refrigerant gases are likely to remain the strongest pocket of the fluorochemical chain in Q2FY27E. R-32 spreads remained near record level at ~INR 700/kg (+8% QoQ), while HF price moderated QoQ. Despite elevated sulphur-linked feedstock cost, sustained refrigerant demand and firm realisation are likely to support HF performance. We remain constructive on the segment over medium-term, with TANF well-positioned to outperform, supported by contracted capacities, backward integration and the upcoming R-32 plant, expected to be commissioned by CY27-end. Chemicals: Supply Deficits Continue to Drive Earnings Growth Q2FY27 Quarterly Results Preview 1 QoQ Broad-based Price Correction, YoY Price Remains Elevated

For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer

SEBI Registration no.: INZ 000160131