Thread by @gvkreddi

A thread on #Chemicals Sector in India:
When I did a 'lazy Sunday' data crunch in Sep 2020 (

https://twitter.com/gvkreddi/status/1310856340420485122

), 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
🙏