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Below the Quote on Agrochemical Sector & IT sector by Vinit Bolinjkar - Head of Research - Ventura

Agrochemical Sector: The Indian agrochemical sector is transitioning from a destocking-led downturn toward early stabilisation; however, the recovery remains uneven, and equity performance continues to diverge between margin-led improvement and genuine demand recovery. In Q1FY27, UPL reported 10% revenue growth and a 180-bps expansion in its contribution margin to 45.2%, supported by 3% pricing growth, improved utilisation and a favourable product mix, even as crop-protection volumes declined 3%. Sharda Cropchem similarly delivered 9% revenue growth and a 220-bps expansion in its EBITDA margin, despite an 11% decline in European revenue as heatwaves prompted distributors to reduce inventories. In contrast, PI Industries’ agrochemical exports declined 12% in value and 8% in volume, resulting in a 29% fall in EBITDA and a 10% correction in its stock. This highlights that the market still requires evidence of a sustainable recovery in volumes. Globally, inventory normalisation is progressing, but broad-based restocking has yet to begin. Syngenta’s H1 crop-protection sales in LATAM fell 11% amid elevated inventories and pricing pressure, while Corteva’s Q2 crop-protection pricing and volumes declined 4% and 2%, respectively. China also remains a pricing overhang: the July pesticide price index declined 4.38% MoM, while glyphosate prices continued to fall sequentially. Domestically, kharif acreage stood at 1,086.3 lakh hectares, approximately 1.6% below last year’s level, limiting the potential for a meaningful demand offset. Overall, margins are recovering ahead of volumes, driven by reduced inventory drag, a favourable product mix and cost efficiencies rather than a broad-based pricing upcycle. The three- to six-month outlook is cautiously positive; however, a durable sector rerating will require distributor restocking, stabilisation in Chinese molecule prices, a sustained recovery in export volumes and improved domestic crop conditions

IT Sector: The recent retreat in IT sector valuations reflects a mix of cyclical macroeconomic pressures and rapid technological transitions. A slowing global growth outlook and persistent high interest rates have led corporate clients to delay discretionary technology spending and scrutinize large IT budgets. On the structural side, the rapid acceleration of Generative AI is transforming service delivery. The automation of routine coding, testing, and data engineering is squeezing traditional, effort-based billing models. While AI represents a major long-term growth catalyst, it creates near-term revenue friction before enterprise-wide transformation projects achieve scale. Outlook Near-term market sentiment remains cautious as enterprise clients prioritize cost optimization. However, the long-term structural trajectory is robust as IT leaders pivot toward enterprise AI integration, cloud infrastructure modernization, and cybersecurity services to expand their global addressable market.

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