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Amid a challenging industry environment, Indian chemical companies reported mixed results for 1QFY26 despite a generally easy year-ago base. Of the 65 companies for which we compiled results, more than a third reported yoy declines in EBITDA; more than half reported under 10% yoy growth in EBITDA. The recent announcement of US tariffs comes as a fresh headache; the industry faces a difficult outlook, in our view.

Mixed results despite a generally easy yoy base

Of the 65 companies in our sample, 31 reported more than 10% yoy growth in EBITDA. An easy year-ago base was a common theme across most such cases. Other factors that helped included firmness in refrigerant prices (benefiting SRF and Navin); firmness in palm oil prices (Agrovet); strong demand for NPK fertilizers (Paradeep, Coromandel) amid a shortage of DAP; early arrival of the monsoons (Rallis, Sumitomo); and correction in input costs (UPL, Vinati). Acutaas extracted margin expansion from process improvements; Aether benefited from the Baker Hughes contract ramp-up. In contrast, companies that registered sharp yoy EBITDA declines were hurt by continued demand weakness and pricing pressure: e.g., Chemplast, Deepak Nitrite, Aarti and PI. Evidently, specific drivers helped amid continued industry headwinds.

Agrochemical companies’ late-season commentary turned negative

Agrochemical companies that reported results later in the earnings season offered a relatively more negative view of how 1QFY26 had unfolded: Dhanuka, Godrej and Insecticides India highlighted subdued demand--especially for herbicides—due to “late and uneven” arrival of monsoons and farmer caution following poor economics in previous seasons. Channel inventories were also reported to be high in India. The abrupt ban on biologics hurt PI and Dhanuka. Competition from generics remains intense, as indicated by Godrej and Dhanuka. At the global industry level, agrochemical destocking is reported to be largely behind us, but product prices are not picking up, barring in certain pockets. However, correction in prices of chemical intermediates has helped margins recover (e.g., UPL). USD depreciation versus the EUR helped Sharda.

Tense outlook post announcement of high US tariffs on India

While companies did not specifically call this out, we believe one factor boosting results in 1QFY26 was front-loading of orders by customers ahead of expected US tariff announcements. Now that tariffs have come into effect in August 2025, we would expect orders to slow down in coming months. This is even without considering the high tariffs on India; >70% of US chemical imports are anyway exempt from tariffs. However, the indirect impact on demand for chemicals via a slowdown in key end-use industries—such as textiles and auto ancillaries—could be meaningful. We would anyway expect the US economy to slow down as inflation rises due to tariffs and heightened unpredictability stalls decision-making by customers. Meanwhile, there are no significant signs of any “anti-involution” crackdown on chemical overcapacity in China.

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