Best Chemical Stocks In India

Chemical industry is a vital supplier of raw materials to sectors like agriculture, pharmaceutical, packaging, construction, food processing, and many others. India’s chemical industry, which has long been lagging behind major Asian manufacturing nations has found a new pace of growth in recent years. This new pace of growth has made chemical stocks one of the most attractive investment options in the stock market. Last 5 years saw many small-cap, mid-cap and large-cap chemical stocks outperform other stocks in the Indian stock market.

Industry Overview

India is the 6th Largest producer of Chemicals in the world and 4th largest in Asia. The country ranks 14th in export of chemicals.

Sales of Chemicals sector in India is worth ~$212 billion (2021). And it is projected to reach $300 billion by 2025 growing at 9.3% CAGR.

Along with fundamentals and qualitative factors like management quality and efficiency, one must take a long-term view of the financials when looking for the best chemical stocks to invest in India.

Factors to Consider Before Choosing the Best chemical Stocks to Buy in India for Long Term 2022

Sector priority: Specialty Chemicals > Fine Chemicals > Industrial Gases > Commodity Chemicals
The market capitalization should be at least more than Rs 5,000 crores.
Profit growth for five years average should be more than 10%
Net profit margin for five years average should be more than 10%

Following is the list of the top chemical stocks in India.

Pidilite

Pidilite is India’s largest specialty chemicals manufacturer by volume and sales. It makes adhesives & sealants, construction & paint chemicals, art & craft materials and pigment & preparations.
The company’s consumer products business contributes ~80% of the sales followed by B2B products with ~20%. The company also has its presence overseas in the Americas, Middle East & Africa and Asia (other than India).
Adhesive & sealants is the largest business segment of the company. Furthermore, the adhesive segment has a 70% market share in the country. Brand Fevicol is the country’s most popular adhesive brands. Along with Fevicol the company also has other trusted brands like M-Seal, Fevikwik, Fevistik, Roff, Dr. Fixit, Fevicryl, Araldite, Araldite Karpenter and Araseal.
Pidilite is a debt-free corporation with 26% ROCE. Over the last decade, it has increased its revenues at 12% CAGR and increased profit at 14% CAGR. The company had a net profit margin of ~16% for the last 5 years. ROE is at 25% for the past 10 years.

PI Industries

PI Industries is one the largest agrochemicals manufacturer in India. It is involved in the manufacture and sale of agrochemical formulations viz., insecticides, herbicides and fungicides. The company also produces few specialty products. The company synthesizes active ingredients that are used in its agrochemical formulations captively.
The company is also into services business of R&D and CSM (custom synthesis and manufacturing) of active ingredients and chemical intermediates.
The company has three operating segments: Active Ingredients and Intermediates, Formulations and Others. Active Ingredients and Intermediates constitute 78% of the company’s revenue followed by formulations with 20%.
Awkira, Brofreya and PB Knot are its top selling formulations.
The company also has its market overseas in North America, Europe, Asia (other than India) and rest of the world.
PI Industries is almost a debt-free corporation with 21% ROCE (5 Yr avg). Over the last five years, it has increased its revenues at 18% CAGR and increased profit at 13% CAGR. The company had a net profit margin of ~15% for the last 5 years. ROE is at 20% for the past 10 years.

SRF

SRF Ltd is an Indian chemicals manufacturing company based in Gujarat which is also into packaging and textile business.
The company’s chemicals business consists of:
- Specialty Chemicals division – produces active, non-active advanced intermediates used in agrochemicals and pharmaceutical industries. It also provides custom research & synthesis for major players in the agrochemicals and pharma sector.
- Fluorochemicals division – Global-scale fully integrated manufacture of refrigerants & pharma propellants and industrial chemicals. It also manufactures ozone-friendly refrigerants in India. These have application in room air-conditioners, pharma, automobile air-conditioners, refrigerators and chillers.
Plants in Dahej and Bhiwadi located in Gujarat and Rajasthan respectively.
SRF is a market leader in most of its business segments in India and also commands a significant global presence in some of its businesses, with operations in four countries namely, India, Thailand and South Africa and Hungary.
SRF Ltd has 16% average return on capital employed for the past five years. Over the last decade, it has increased its revenue at 12% CAGR and increased profit at 18% CAGR. The company had a net profit margin of 12% for the last 5 years. ROE is at 18% for the past 10 years.

Aarti Industries

Aarti Industries Limited (AIL) is a leading Indian manufacturer of specialty chemicals and pharmaceuticals. It is based in Gujarat with 21 manufacturing plants.
The company manufactures chemicals used in the downstream manufacturing of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments and dyes.
Aarti Industries has two product segments:
- Chemicals – Benzene derivatives such as 2 3-DCNB, 1 2 4-TCB, 3 4-DCNB, 1 2 3-TCB etc. and Toluene derivatives such as NEMT, DEMT, DEPT etc.
- Pharmaceuticals – APIs, intermediates and xanthine derivatives.
The company is also involved in small molecule Contract Development and Manufacturing Services (CDMS).
Around 44% of your Company’s revenue is contributed through exports (FY2021-22).
Aarti Industries Limited has 17% average return on capital employed for the past five years. Over the last decade, it has increased its revenue at 15% CAGR and increased profit at 29% CAGR. The company had a net profit margin of 12.5% on average for the last 5 years. ROE is at 22% for the past 10 years.

Deepak Nitrite

Deepak Nitrite, headquartered in Gujarat is one of India’s largest chemical companies. It is involved in the manufacturing and sale of commodity chemicals, fine and specialty chemicals.
Commodity chemicals come under its phenolics segment and fine and specialty chemicals are included under its advanced intermediates segment.
- Its Phenolics segment includes phenol, acetone and isopropyl alcohol (IPA). The segment caters to pharmaceuticals, plywood, agrochemicals, paints & coatings, rubber chemicals, laminates, adhesives, resins and aldol chemicals markets.
- Its Advanced Intermediates segment include fine chemicals such as basic organic intermediates, other organic chemicals and pharmaceutical intermediates. Specialty chemicals include its Ptrotecto range wood preservatives, personal care chemicals, dyes and performance products. This segment caters to agrochemicals, detergents, hair dyes, pharma, dyes & pigments, paper, textile, personal care, industrial explosive, glass, fuel additives and rubber markets.
The company is a leading supplier of phenol, nitrotoluenes and sodium nitrite in India.
The phenolics segment is its largest segment by sales with 63% share of the total Rs 68.02 billion (FY2021-22) in sales. Advanced intermediates is its high net profit margin segment.
Deepak Nitrite is almost a debt-free corporation with ~27% ROCE (5 Yr avg). Over the last five years, it has increased its revenues at 38% CAGR and increased profit at 87% CAGR. The company had a net profit margin of ~12% for the last 5 years. ROE is at 34% for the past 5 years.

Atul Ltd

Atul Limited is another large chemical company headquartered in Gujarat. The company is into manufacture and sale of specialty chemicals, fine chemicals and polymers. Atul manufactures 900 products and 400 formulations and owns 140 retail brands.
The company has two business segments:
- Life Science Chemicals and Performance & Other Chemicals. Life science chemicals include pharmaceuticals (APIs) and agrochemicals, which contribute 34% of the company’s sales. While performance and other chemicals include aromatics, colors, bulk chemicals and polymers/performance materials contributing 66% of sales.
- Product-wise sales % share: Epoxy resins & hardeners – 32%, Intermediates – 23%, Herbicides – 19% and Textile dyestuffs – 16%.
Atul ltd is the only manufacturer of Resorcinol in India and is amongst the world’s largest manufacturers of Dapsone, an API.
Atul ltd is almost a debt-free corporation with ~21% ROCE (5 Yr avg). Over the last five years, it has increased its revenues at 12% CAGR and increased profit at 13% CAGR. The company had a net profit margin of 13% for the last 5 years. ROE is at 18% for the past 10 years.

Navin Fluorine

Navin Fluorine International ltd (NFIL) is a chemicals manufacturer based in Surat, Gujarat. The company is into manufacturing and sale of specialty chemicals and fine chemicals.
The company has four business units:
- Refrigeration – which includes the company’s Mafron brand of refrigerants,
- Inorganic Fluorides – this unit includes inorganic fluorides such as Ammonium bifluoride, Sodium fluoride among others whose end use industries are oil & gas, steel, pharma and agrochemicals, abrasives, electronics and solar cells.
- Specialty Fluorochemicals – which includes Specialty fluoro intermediates used in the production of pharma, crop protection, hydrocarbon and fragrances products.
- CDMO – Contract Development and Manufacturing Organisation (CDMO) unit offers custom chemical syntheses of fluorinated compounds for the pharmaceuticals, agro chemicals and speciality chemicals industries.
NFIL’s Inorganic Fluorides business grew 42% from Rs 1.93 billion in FY 2020-21 to RS 2.74 billion in FY 2021-22; its Specialty Chemicals business grew 25% from Rs 4.53 billion in FY 2020-21 to Rs 5.66 billion in FY 2021- 22.
NFIL is a debt-free company with ~19% ROCE (5 Yr avg). Over the last five years, it has increased its revenues at 14% CAGR and increased profit at 15% CAGR. The company had a net profit margin of 24% for the last 5 years. ROE is at 17% for the past 10 years.

Vinati Organics

Headquartered in Mumbai, Vinati Organics is a leading specialty chemicals and fine chemicals manufacturer.
Its specialty chemicals products include Specialty Aromatics, Specialty Products and Miscellaneous Polymers. Fine chemicals include Specialty Monomers and Butyl Phenols.
- Specialty Aromatics – Iso butyl benzene (IBB), Primary (NBB) & Secondary Butyl Benzene (SBB), Tertiary Amy Benzene, 3-Phenylpentane, C10 Aromatic solvent and 4-Butylaniline.
- Specialty Products – Isobutylene, Methanol, Hexene, Isohexane, tert-Methyl Butyl Ether, tert-Butylamine, P-tert-Butyl Benzoic acid and Methyl 4-tert-Butyl Benzoate.
- Miscellaneous Polymers – Vintreat, Vinplast 245 and Vinflow HT.
- Specialty Monomers – ATBS, NAATBS, TBA and TOA.
- Butyl Phenols – OTPB, PTBP, 2 4 DTBP and 2 6 DTBP.
The company is the world’s largest manufacturer of IBB and ATBS, commanding more than 65% market share for both these products.
Vinati Organics supplies products in more than 35 countries across the US, Europe and Asia.
Vinati Organics is a debt-free company with ~26% ROCE (5 Yr avg). Over the last decade, it has increased its revenue at 14% CAGR and increased profit at 20% CAGR. The company had a net profit margin of 25% for the last 5 years. ROE is at 24% for the past 10 years.

Balaji Amines

Balaji Amines ltd is a chemicals company headquartered in Maharashtra. The company is one of the leading manufacturers of aliphatic amines and derivatives in India.
- The company produces following Amines – mono/di/tri methylamines, mono/di/tri ethylamines, dimethyl & diethyl amino ethanol.
- It produces following Derivatives – di methyl acetamide, di/tri methyl amine HCl, di/tri ethyl amine HCl, dimethyl urea and choline chloride.
- Specialty chemicals include – NMP, morpholine, 2-P, NEP, G-butyrolactone and DMF.
- Poly Vinyl Pyrrolidone (PVP-30), a Pharma excipient.
Balaji Amines is the largest Indian producer of the following products – Methylamines, Ethylamines, Di-Methyl Acetamide (DMAC), Di-Methyl Amine Hydrochloride (DMA HCL), Dimethylformamide (DMF).
The company’s end use customers are from pharmaceuticals, agrochemicals, paints & resins, animal feed, oil & gas, rubber cleaning chemicals, water treatment chemicals, dyes & textiles.
The company has global presence with exports contributing 19% to its total sale revenue.
Balaji Amines is almost a debt-free company with ~32% ROCE (5 Yr avg). Over the last decade, it has increased its revenue at 18% CAGR and increased profit at 27% CAGR. The company had a net profit margin of 25% for the last 5 years. ROE is at 26% for the past 10 years.

Alkyl Amines

Alkyl Amines Chemicals Ltd is a chemical company headquartered in Mumbai engaged in manufacture and sale of aliphatic amines and amine derivatives.
The company has three types of products segments:
- Amines & Amine Derivatives – these include 1-4 C amines, cyclohexylamines, ethylhexyl amines, furfurylamine, alkyl amine HCL, DIPEA, DEET etc.
- Other Specialty Chemicals – chemicals such as acetonitrile, DBU, ALCHAN, DMPU, DGA, EOEA etc
- Industrial Gases – industrial gases are used captively.
The Company has exported its products to nearly 10 countries including Philippines, USA, Israel, Norway, Spain, UK, Switzerland, Belgium, Malaysia, Middle East countries.
Alkyl Amines Chemicals Ltd has 37% average return on capital employed for the past five years. Over the last decade, it has increased its revenue at 18% CAGR and increased profit at 29% CAGR. The company had a net profit margin of 16% on average for the last 5 years. ROE is at 32% for the past 10 years.

Anupam Rasayan

Anupam Rasayan is a leading chemical company based out of Gujarat.
It is engaged in custom synthesis and manufacturing of specialty chemicals and is one of the market leaders in India for this segment.
Anupam Rasayan has two business segments:
- Life Science related Specialty Chemicals –
  - Include agrochemicals and crop protection chemicals such as agro intermediates and agro active ingredients such as insecticides, fungicides and herbicides, plant growth regulators.
  - Personal care chemicals such as antibacterial and UV protection intermediates and active ingredients.
  - Pharmaceuticals include intermediates and key starting materials of APIs.
- Other Specialty Chemicals –
  - Specialty pigments
  - Specialty dyes
  - Polymer additives
It has six manufacturing units located in the industrial areas of Sachin in Surat and Jhagadia in Bharuch, both in the state of Gujarat.
The company has its presence overseas in North America, Europe, Asia (other than India) and rest of the world contributing 56% of its sales revenue in FY22 from exports.
Anupam Rasayan is slightly in debt with ~11% ROCE (5 Yr avg). Over the last five years, it has compounded its revenue by 30% and its profit compounded by 34%. The company had a net profit margin of ~11% for the last 5 years. ROE is at 9% for the past five years.

Note: These Best Chemical Stocks In India are not recommendations, this article for is information purposes only.

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