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Chemicals

Chemicals & Agrochemicals: In Q1FY26, we expect most specialty chemical companies under our coverage to show steady YoY improvement, primarily driven by volume growth on a favourable (low) base. However, QoQ performance is likely to be mixed, influenced by geopolitical tensions and tariff-related uncertainties. Pricing remains subdued due to ongoing macroeconomic challenges.

Refrigerant gas players are expected to report strong results, supported by favourable global prices and solid export demand. In contrast, commodity chemical companies are likely to post subdued numbers amid continued headwinds, although operational efficiency initiatives may offer some relief.

Within agrochemicals, we anticipate that companies with a domestic focus are likely to perform better. Growth in the domestic market is expected to be supported by new product launches, strong volume growth ahead of the kharif season, and healthy demand driven by a normal monsoon outlook. Generic agrochemical players are also likely to report volume-led growth as inventory destocking completes. On the export front, global destocking has largely been completed, and fresh demand is now contributing to growth in international markets.

Overall, we foresee a mixed performance across the chemicals and agrochemicals sector in Q1FY26, with domestic demand remaining more resilient compared to exports. Meanwhile, customers continue to wait for greater clarity on long-term tariff policies. Additionally, given China’s ongoing overcapacity, there is an elevated risk of increased price competition in non-US markets.

Diversified Midcaps: YoY revenue growth is anticipated for the midcap stocks under coverage, driven by an increased focus on exports and stable domestic demand. These companies, primarily in the manufacturing sector, are expected to benefit from stronger demand from key end markets and resulting operational efficiencies.

Aarti Industries Ltd: We expect a slight YoY decline in revenue, impacted by multiple geopolitical disruptions and volatility in raw material prices, even though volumes are likely to grow. EBITDA is projected to decline YoY due to sustained pricing pressures, with margins expected to be slightly lower compared to the same quarter last year.

Apcotex Industries Ltd: Revenue growth is anticipated to be supported by higher volumes and strong export momentum. However, oversupply in certain segments, particularly nitrile latex/gloves, is likely to continue weighing on realisations YoY. We expect EBITDA to improve, driven by higher utilisation and operational efficiencies.

Archean Chemical Industries Ltd (ACIL): We foresee top-line growth supported by strong demand and higher volumes compared to the previous couple of quarters, which were impacted by various logistical challenges. Bromine volumes, in particular, are expected to grow, aided by increased contribution from bromine derivatives. Margins are likely to improve sequentially.

Camlin Fine Science Limited: We anticipate top-line growth due to the continued momentum in the blends and aroma business and the ramp-up of the vanillin plant, which is expected to benefit from rising vanillin prices. While the performance chemical business is expected to remain muted, margins are expected to improve. The EBITDA Margins are expected to see an increase due to positive operating performance, favourable product mix and reduced losses in closed Italy and China facilities.

NOCIL Ltd: We anticipate muted revenue growth YoY, due to persistent competitive pressures. EBITDA margins are expected to be under pressure due to ongoing pricing challenges.

Navin Fluorine International Ltd: For NFIL, we anticipate revenue growth to be driven by capacity expansion, strong export momentum, a healthy order book in spec chem, stabilisation of the HFO plant, and a positive trend in refrigerant prices. The EBITDA is expected to increase mainly due to improved operational performance and favourable pricing.

PI Industries Ltd (PI): PI continues to focus on expanding into new products within the Non-AgChem sector and enhancing capabilities in non-core businesses. Revenue is expected to grow primarily driven by the strong performance of new products. The company’s pyroxasulfone business is expected to remain under pressure, partially offsetting margin gains in other businesses.

Dhanuka Agritech Ltd: Top-line growth is expected on the back of a good monsoon, strong demand, and positive traction in new products. The rollout of new molecules will be an important factor to monitor. Margins are projected to improve YoY, benefiting from a better product mix and operational leverage.

Diversified Mid-Cap Opportunities

Praj Industries: Praj Industries’ performance is expected to remain under pressure during the quarter due to continued weakness in the domestic bio-energy business. We expect the top line to be impacted by the extended project execution cycle, delay in the pickup of the new Mangalore facility. The EBITDA is expected to degrew owing to higher fixed income expenses against lower revenues.

Mold-Tek Packaging: Mold-Tek Packaging is expected to report revenue growth in Q1FY26, driven by increased volumes in the FF, Paint, and Pharma segments, driven by higher demand and the addition of capacities. The company has guided continued improvement in EBITDA/KG due to the contribution from the high-margin pharma segment.

Welspun Living: We expect topline growth to moderate as demand is likely to be impacted by tariff-related uncertainties. The EBITDA Margins are expected to decline due to operational deleverage and elevated freight-related expenses, also leading to a decline in PAT on a YoY basis.

Pitti Engineering Ltd: We expect the company to continue the growth momentum, supported by volume growth and synergies. The higher contribution of value-added assemblies and the benefits of merger synergy are expected to contribute to improved margins YoY.

Kirloskar Brothers Ltd (KBL): Sustained demand in key markets and a strong order book are expected to translate into a strong YoY revenue growth for KBL. The EBITDA Margins are expected to improve further YoY with better product mix and execution of cost-saving strategies.

Va Tech Wabag Ltd: The company had an order book of approximately Rs 13,700 Cr as of Q4FY25, which supports the expectation of robust revenue growth in Q1FY26. However, the revenues are likely to decline sequentially compared to Q4, which is a seasonally strong quarter. EBITDA Margins are expected to remain at a similar level, as guided by the company.

Gravita India Ltd: We expect revenue growth driven by volume growth and supported by robust lead prices. The company is likely to maintain similar margins as the previous quarter (post other income, which includes hedging-related income).

Key Monitorable in Q1FY26

We remain vigilant on management commentary related to demand trends, capacity utilisation, and geopolitical risks, especially in light of the global geopolitical conflicts, which have driven crude oil prices higher, as well as tariff-related uncertainties. The company’s significant exposure to the US market could lead to temporary demand disruptions, as customers may delay orders awaiting more clarity. Over the long term, the tariff environment could favour Indian players by reducing competition from countries facing higher tariff rates than India. Nevertheless, we advise maintaining a cautious outlook on companies with substantial US export exposure, as their near-term performance may be adversely affected.

Our Top Picks:

Camlin Fine Science Ltd, Navin Fluorine International Ltd, PI Industries Ltd, Dhanuka Agritech Ltd, Mold-Tek Packaging Ltdm

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