Home / Markets / Stock Markets /  Nirmal Bang sees upside on these 6 chemical stocks. Check target prices

Chemical stocks are likely to witness growth in topline, ranging from modest to healthy, especially in international revenues, driven by increase in product prices, said domestic brokerage and research firm Nirmal Bang in a note on the chemical sector. 

“However, Indian Agrochemicals revenue growth may be muted despite price increases due to subdued volume. The weak distribution of rains between mid-June and end-July has capped the overall area sown under Kharif crops to near year-ago levels, with material decline in key crops like rice and pulses," the note stated.

The brokerage has a target price of 1,144 on UPL shares, Coromandel Industries (TP: 1,126), PI Industries (TP: 3,979), Tata Chemicals (TP: 1,233), Sumitomo Chemicals (TP: 529), and Anupam Rasayan (TP: 838).

In terms of year-on-year (YoY) growth in net profit, Tata Chemicals (TTCH) leads the brokerage's coverage universe with 128% growth followed by PI Industries with 36.4% growth. “The current trend looks healthy for Tata Chemicals, but watch out for commentary on future outlook for Soda Ash demand given the global headwinds of rising interest rates, which could put pressure on growth in key end-use sectors."

“We see Tata Chemicals leading the sector with 128% YoY PAT growth, followed by PI Industries with a PAT growth of 36.4% YoY. Coromandel and UPL are next in line, with 23.9% YoY and 22.1% YoY growth in profit, respectively. Sumitomo will report a 13.9% YoY growth in PAT. Anupam Rasayan will see a PAT growth of only 8.3% YoY. The Kharif sowing trend till date has been mixed, with the total area sown down 0.8% YoY," estimates the brokerage.

Impact of rising raw material (RM) prices on gross margins, new product launches, change in working capital and channel inventory, potential increase in the prices of key CPC products is likely to cushion the above impact are some of the watchlist for 2QFY23. Key catalysts, as per Nirmal Bang, could be Ppotential softening in input costs and reduction in freight rates with improving supply of containers (likely to happen once the Russia-Ukraine conflict is over).

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Know your inner investor Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Take the test
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout