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2025-03-31 04:27:16 pm | Source: IANS
Indian specialty chemicals sector`s 7–8 pc revenue growth in FY26 to be volume-driven
Indian specialty chemicals sector`s 7–8 pc revenue growth in FY26 to be volume-driven

The Indian specialty chemicals sector’s 7-8 per cent revenue growth next fiscal (FY26) will be largely volume-driven with realisations under pressure, according to a Crisil report. 

Trade-related uncertainties stemming from US tariff actions could upend the recovery in profitability of India's specialty chemicals sector.

Companies with balanced portfolios or catering to resilient end-user sectors are likely to better absorb shocks, while those reliant on exports or commoditised segments may face increased margin risk due to price volatility, said the report.

According to Anuj Sethi, Senior Director, Crisil Ratings, domestic revenues, forming 63 per cent of the pie, are expected to grow 8–9 per cent, while exports, may see 4–5 per cent growth.

Profitability pressures will continue but vary across companies, influenced by end-user exposure, revenue mix and demand-supply dynamics.

The report looked into 121 companies rated by Crisil Ratings, representing about one-third of the highly fragmented sector valued at Rs 4 lakh crore.

Meanwhile, the country’s real gross domestic product (GDP) growth would be steady at 6.5 per cent in fiscal 2026, despite uncertainties stemming from geopolitical turns and trade-related issues led by US tariff actions, according to another Crisil report this month.

The forecast is based on two assumptions. These include another spell of normal monsoon and commodity prices continuing to remain soft. Cooling food inflation, the tax benefits announced in the Union Budget 2025-2026, and lower borrowing costs are expected to drive discretionary consumption, the report mentioned.

Growth is now returning to pre-pandemic rates as fiscal impulse normalises and the high-base effect wears off. Even with that, the high frequency Purchasing Managers Index (PMI) data reveals that India maintains its pole position among major economies.

According to the report, manufacturing growth is expected to average 9.0 per cent per year over fiscals 2025-2031, up from 6 per cent on average in the pre-pandemic decade. The services sector will remain the primary growth driver. As a result, the share of manufacturing in GDP will increase to 20 per cent from 17 per cent in fiscal 2025, the report predicted.

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