JM Financial, a brokerage and research firm, stated in a note on the Indian chemicals market that contracted companies offer strong volume off-take visibility despite slowing demand and rising energy prices in Europe. Additionally, If any off-take slowdown can be rectified in upcoming quarters; as a result, the brokerage firm has chosen to contract SRF for large-cap stocks and Navin for midcap stocks.
In contrast to contractual players like Navin Fluorine and Anupam Rasayan, most chemical businesses covered by the brokerage are anticipated to show weak sequential sales growth (or even contraction in some circumstances), the brokerage predicts.
Additionally, a decline in basic chemical players should lead to an improvement in sequential margins for the majority of the companies we cover. In addition, it stated that the restoration of the export incentives scheme should increase the margin for all chemical companies starting in the 4QFY23.
“SRF’s sales of refrigerant gases are probably going to decline sequentially, but sales of fluoro specialty chemicals should keep growing strongly, in our opinion.
According to the paper, Navin Fluorine will profit from a significant uptick in HPP and specialty chemical contracts.
Due to seasonality, which will counteract CSM’s business difficulties, PI’s domestic company will perform well. Price increases will assist Clean Science when the production of newer items picks up. Contract players are still preferred by the brokerage because they guarantee significant volume growth and margin pass-through (with a certain lag in some cases). SRF, a large-cap firm, and Navin Fluorine, a midcap stock, are its top chemical sector investment picks.
