A thread on #Chemicals Sector in India:
When I did a 'lazy Sunday' data crunch in Sep 2020 (), of all the sectors that performed well over the last 29 yrs, broken down in to three decades, there were some interesting insights.
Barring the period between...
1991-2000, the next 2 decades saw stocks from chemical sector perform very well. Of the 973 stocks that gave >100% returns (simple returns: no div. reinvestments) between 2000-2010, 101 were from the chemical sector.
Likewise, between 2010-2020, 82 chemical stocks topped charts.
Just yesterday, I checked for all BSE Companies with 10 Yr CAGR >25% & found 189 stocks, of which 41 stocks were from Chemical sector. A quick glance through the list brings a smile to my face, as many of these were good quality stocks with decent credentials - Portfolio worthy.
Over last 2 decades, India has made large strides across manufacturing, and chemicals has been a great contributor - 6th in the world & 4th in Asia in terms of global sale of chemicals, accounting for 2.5% of the world’s global chemical sales (PwC Rpt).
Stats are a revelation.
Market size and growth prospects: #chemicals
- India’s chemical sector was estimated to be worth $178bn in FY20 & has potential to reach $300bn (~9.2% CAGR) by FY25.
- In terms of demand, the industry has grown at approximately 1.3X India’s avg GDP growth in the last 5 yrs.
India ranks 6th in imports & 9th in exports of global chemicals & chemical products (w/o pharma prdts).
Imports increased at 5.4% CAGR (FY16-FY20) with petrochemical intermediates at over 30% in total imports.
OTOH, export of chemicals & chemical products grew at 7.2% CAGR.
Specialty chemicals account for >50% of chemical exports, dominated by agrochemicals, dyes & pigments.
This segment grew at ~11.7% (value terms) in last 5 yrs, & has continued demand from construction, auto, packaging, water treatment, home & personal care, food processing etc.
Sector trends:
- Customer preference for ESG compliant products
- India per capita consumption to double by 2025, from the current 0.1X of global avg.
- Cos implementing digitalization initiatives & tools in supply chains, demand planning, pricing strategies.
- China+1 factor.
Projects in petchem segment (Source: PwC)
In specialty segment, lot of value addition expected.
APIs, KSMs, Surfactants, water treatment along with battery materials & chemicals are demand drivers going ahead.
Tremendous opportunities for growth in next decade.
The end
🙏
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