Best Chemical Stocks in India: Top chemical sector stocks
Chemical industry in India is today counted amongst the largest and one of the most progressive across the country. Therefore having a broad range of products and adding a lot of value to the economy it also gets a lot of investors who are on the lookout for growth investments. The Indian chemical industry is very broad which consists of basic chemicals, specialized chemicals, agro chemicals, petro chemicals and many more industrial fluids, reagents, solvents etc which are used both domestically and internationally.
Few of the chemical companies in India have posted good performances in the recent years due to factors such as increasing demand, product differentiation and geographical diversification. This blog is focused on the analysis of chemical stocks in India of which investors fancy by highlighting the best performing chemical stocks.
1. Reliance Industries Limited (RIL)
Overview: The Reliance Industries is one of the biggest players in the country when we talk about the chemical sector in the country. Reliance Industries is the biggest petrochemical player as a private company in India. The company’s petrochemical division that contributes a significant portion to RIL’s total revenue generates a wide product portfolio that includes polymers, polyester fibers and intermediates, elastomers, among others. Such strategic investment in new plants and accretion of technologies has put the company in a competitive advantage in the chemical industry world wide.
Why Invest in Reliance Industries Limited (RIL) ?
Diversified Portfolio: It is evident that the business has some of the investment risks well diversified in chemical, refining and retail business as making Reliance a good investment.
Global Reach: Now it ranks the world’s top 10 petrochemical makers and the company has extended its supply chain worldwide.
Expansion Plans: Reliance Industries is expanding its production of petrochemicals and investing in technologies, bio based goods and ecochemical processes.
Financial Strength: Also, there has been relatively stable growth of the revenue base with a strong balance sheet and good cash flow generating ability and consistent profitability makes RIL as a company with stable long-term investment horizon.
2. SRF Limited
Overview: SRF Limited is a well-established multi divisional company having its businesses in chemicals, packaging films & technical textiles among others. The major products offered in the chemicals business include fluorochemicals, specialty chemicals and refrigerants. SRF today boasts of a strong manufacturing base and has a status of a world’s leading fluorochemical company
Why to Invest in SRF Limited?
Leadership in Fluorochemicals: SRF enjoys market dominance and growth over fluorochemicals with a rapidly rising presence in the global market.
Diversified Business Portfolio: The company has a diversification in different segments that thus gives stability and opportunity to grow.
Expansion in Specialty Chemicals: SRF has increased its turnover through the acquisition in specialty chemicals vertical, which has higher operating margins and a larger growth prospect.
Consistent Financial Performance: As for the revenue streams and the profitability of SRF, we can talk about the following strengths of the financial performance, Stable and increasing revenues for the company, The company remains profitable.
3. PI Industries Limited
Overview: PI Industries is an India based agrochemical company which focuses on custom synthesis and contract manufacturing. It specialises in delivering consultancy services, R&D, to the commercial manufacturing of various advanced chemical products. It has an excellent market share position in the domestic and export markets with its customers in excess of twenty countries.
Why Invest in PI Industries?
Strong Custom Synthesis Capabilities: PI Industries has grown to be a giant in custom synthesis and contract manufacturing to several companies across the world.
Focus on Innovation: This area outlines the fact that the company can invest in research in order to come up with new and unique products hence improving on its competitiveness.
Robust Export Business: Due to a large proportion of its sales from exports, PI Industries helps in investing in the foreign market.
Financial Stability: The financial performance of the PI Industries is quite impressive, and the company has been able to demonstrate steady increase in its revenue and profitability.
4. UPL Limited
Overview: UPL Limited, previously known as United Phosphorus Limited billed itself as an agrochemical company. The company is in the fifth position of the global agrochemical firm and has operations in more than 130 countries. UPL supplies crop protection products, seeds and other agri-inputs. It has due to its concentration in the provision of new and durable solutions managed to cover all sectors within agriculture.
Why Invest in UPL?
Global Leadership: UPL has a position among the leading firms in the agrochemical industry that guarantees the company access to the international market.
Focus on Innovation: Researching and implementing environment friendly and new products and services form a significant portion of the company’s expenditure.
Strategic Acquisitions: UPL has also completed several acquisition activities that have enhanced the group’s portfolio and geography as well as client base through acquisitions such as the Arysta LifeScience.
Strong Financial Performance: Markedly, UPL has recorded decent and sustainable financial performances and revenues have been on the right side of the upward trend.
5. Deepak Nitrite Limited
Overview: Deepak Nitrite manufactures and markets basic chemicals, fine and special chemicals and performance products. The company has a well-diversified business portfolio such as agrochemicals, pigments, rubber chemicals, dyes etc that has a vast market both in domestic & international markets. Deepak Nitrite has had tremendous growth in the past three years based on its domain strength of its products and strategic expansion models.
Why to Invest in Deepak Nitrite?
- Market Leadership: It also enjoys a dominating position in strategic chemical segments such as sodium nitrite, sodium nitrate and optical brightening agents.
- Diversified Product Range: The company deals with the production of numerous products within many industries, which helps the company to have a balanced income.
- Strategic Expansion Plans: The company in detail is in a process of diversifying and increasing its production capacity of its products which shall enable it to grow in the future.
- Strong Financials: The company has a stable and rather high financial performance with the constant increase in revenue and profitability level.
6. Tata Chemicals Limited
Overview: Tata Chemicals is a global integrated chemical company and is involved in manufacturing of inorganic chemicals, agro chemical and consumer products. It is among the world’s leading soda ash producers and has a strategic position in special products such as silica and bicarbonates. The company is also eyeing to expand in such niche markets as nutraceuticals, materials science, and energy storage markets.
Why Invest in Tata Chemicals?
- Market Leader in Soda Ash: Soda ash is another product in which Tata Chemicals is a major player being ranked amongst world’s largest producers and having a competitive edge.
- Diversified Business Segments: The company has a diversified singularity of products that is embedded in the basic chemicals, specialty chemicals, and the end-user products section, thus giving a balanced production growth strategy.
- Sustainable Initiatives: Tata Chemicals cares for social responsibility; it has incorporated the concepts of green chemistry to its business.
- Expansion in Specialty Chemicals: The business venture into specialty chemicals together with high growth areas such as nutraceuticals and energy storage form a lucrative growth perspective.
7. Aarti Industries Limited
Overview: Speciality chemical and pharmaceutical firm, Aarti Industries Limited manufactures and exports a wide range of bulk specialty chemicals and pharmaceuticals. They have a strategic position in Benzene based intermediates some of which are carron used widely in many segments such as agrochemicals, dyes & pigments and pharmaceuticals. Over 60 countries are having customers from Aarti Industries and they are mainly in high value niche segments in chemicals.
Why Invest In Aarti Industries?
- Specialty Chemicals Focus: Aarti Industries is a prominent company in the sector of specialty chemicals, and the firm’s product offering is quite scalable across various industries.
- High Export Revenue: The company’s products are exported which means the concern gets a good market overseas.
- Strong R&D Capabilities: The company has always ensured that it spends more of its capital in research to come up with new products as well as diversifying the existing products.
- Long-Term Contracts: The long term supply chain arrangements with key players in the market also prop up for good revenues in the business.
Navin Fluorine International Limited
Overview: Navin Fluorine International Limited (NFIL) is one of the leading global fluorochemicals companies that mainly deals in specialty chemicals, refrigerant gases and CRAMS. Research and development is a key area of focus in the company and it has invested heavily on developing the research capability as well as broadening its product offering.
Why to Invest in Navin Fluorine?
- Leadership in Fluorochemicals: NFIL is currently in the market of fluorochemicals and it is dedicated on specialty chemicals and on those products that can be sold at a high premium.
- Growing CRAMS Business: The company’s CRAMS market section is also a strong opportunity for its development.
- Focus on Innovation: Exhaustive research and development takes central stage at NFIL to ensure it creates and diversifies its products portfolio.
- Solid Financial Performance: The company has continued to reveal an upward trend in its income and has posted good solid returns.
Best Chemical Stocks in India according to market cap.
S.No | Chemical Stock | Market Valuation (INR) |
1 | Reliance Industries (RIL) | 19.93 Trillion |
2 | SRF Limited | 731.49 Billion |
3 | PI Industries | 706.97 Billion |
4 | UPL | 458.8 Billion |
5 | Deepak Nitrate | 399.09 Billion |
6 | Tata Chemicals | 268.36 Billion |
7 | Aarti Industries Limited | 207.04 Billion |
Best Chemical Stocks according to Analyst Buy Rating
S.No | Chemical Stock | Analyst Rating (in%) |
1 | PI Industries | 73.82 |
2 | UPL | 72 |
3 | SRF Limited | 69 |
4 | Aarti Industries Limited | 68.32 |
5 | Navin Fluorine Limited | 60 |
6 | Tata Chemicals | 59 |
7 | Deepak Nitrate | 58 |
8 | Reliance Industries (RIL) | 41.94 |
Factors Impacting Chemical sector stocks
Here are some of the factors that you must keep in mind before investing in the chemical sector stocks:Here are some of the factors that you must keep in mind before investing in the chemical sector stocks:
- Technological Advancements
Keeping abreast with advancement in technology particularly in the chemical industry. Make sure that the companies, which you are interested in, invest into the research and development to remain competitive.
- Raw Material
Fluctuations in the price of crude oil and natural gas together with other raw materials also has an impact on chemical companies’ economic returns. The intense cost and availability of specialty chemicals besides affecting the entire profitability of the Indian speciality chemicals industry.
- Market Conditions
For this you need to monitor the global demand, political situations and any changes in regulations affecting the chemical stocks. Examine how these factors can affect the stocks of the leading chemical businesses.
- De-inventorisation
Several local chemical firms have recently been subjected to margin pressures in the past quarters. Pay special attention to the particular stocks that are not sensitive to the current global market trends like the de-inventorization phenomenon that is putting pressure on chemical firms globally.
- Supply Chain
Chemical industry is one of the industries which face challenges of operations due to a complicated supply chain. There are many risks involved in supply chain such as fluctuations in transportation costs, political risks or any other problems that may emerge. Hence, it will be to your benefit to buy stocks of companies possessing a strong supply chain.
- Company Financials
Analyze the chemical firms’ financial health performance. When analyzing such information you have to look at the company’s revenue, stock price performance, earnings per share and level of debts to assess its stability and possible future growth.
Conclusion
India’s chemical segment unveils a myriad of investment opportunities that are backed by high consumption, growth and research along with increasing international presence. An increased number of Indian companies such as Reliance Industries, UPL, Tata Chemicals, Aarti Industries, SRF, PI Industries, Deepak Nitrite, Navin Fluorine, and Atul Limited have emerged as some of the most significant players with good growth prospects.
Chemical sector is a growth business and this means that through investment in chemical stocks, investors have an opportunity to tap on the development business. But it is pertinent that one has to gather all necessary information and weigh out several factors such as market situation, company specification, performance of actual shares, and the strategies for improving performance before investing in the share market. If managed properly, putting capital in some of the best chemical companies in the Indian market can yield good returns in future.
Also Read : Varun Beverages Share Price Target
FAQ'S
What is the biggest chemical company in India?
Reliance Industries is the biggest company according to its market cap. But it has multiple businesses in it. Solely SRF Limited is the biggest chemical company.
Best Chemical Penny stock?
- Paradeep phosphates ltd.
- National Fertilizers ltd.
- Primo Chemicals
- Bodal Chemicals
- Nagarjuna Fertilizers and chemicals ltd.
Is Reliance also a chemical company?
Reliance Industry’s biggest revenue portion comes from its petro chemical business popularly known as reliance refineries in Jamnagar, Gujarat. Reliance is the biggest player in the petrochemical sector as a private firm in the entire country.
Which chemical is in high demand?
Inorganic Chemicals: An inorganic chemicals segment has high demand and is most opportunistic for India. Its various sub-segments, like Fluorine, Sodium, and caustic, are expected to grow at a CAGR of 10% by 2040.
