Now we have started the stock series to kick off your year 2023. With this article, we will cover the best Best Speciality Chemical Stocks in India 2023 chemical stocks in India in 2023. We will try to understand the Speciality chemical segment with the stocks available on the Indian stock exchange. Which parameter you should consider while doing stock analysis to pick the right stock out of the pool of the stock keeping your mind the risk appetite and investment horizon?
Speciality Chemicals Stocks in India 2023 Post China+1
Speciality chemicals are also referred to as functional chemicals and downstream chemicals. These chemicals are used to impart specific properties or modifications to the primary chemical products. As a result, these are used in very small quantities in end-user products. Adhesives, catalysts, water treatment chemicals, leather chemicals, pigments, surfactants, and other speciality chemicals are examples.
It’s the life cycle of the chemical product which will decide whether it will be considered bulk or Speciality chemical. Due to the lack of product differentiation, competition is primarily on pricing.
Post covid impact, many companies realized the dependence on China due to rising costs and growing US-China competition, compliance costs, sustainability issues, and too restricted economy driving the business firm to diversify their supply chain outside China.
Therefore, India is regarded as the preferred destination for MNCs due to its competitive cost advantage, producing high-quality products keeping sustainability in mind, and conducive business environment initiative taken by the government to attract FDI. Due to this shift, India is witnessing growth from trade diversification in sectors like speciality chemicals, electronics, and textiles. Today’s article will cover only the chemical segment. With these, we can see a surge in the speciality chemicals industry and you need to gear up for future growth.
Before we discuss, which are the best picks for the speciality chemical industry you need to understand the analysis parameters.
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Research Parameter
While picking the best speciality chemical stock you need to thoroughly analysis of the below points to ensure you make the right decision.
- The Company stock you choose should have a monopoly in the market with respect to the speciality chemical they deal in.
- The company should have invested in the CAPEX which reflects their growth prospects as they have confidence in their own business.
- The lower the PE ratio, the better the company stock is considered. As the PE ratio signifies the quantum of money an investor is ready to invest in one stock.
- Return on capital employed is a crucial factor in analyzing the capital-intensive industry. The more ROCE, the better it is.
- You should also consider to debt to equity ratio. The lower it is, the better the stock of the company performs, as they have less liability on their books.
- Need to take look at the sales growth pattern of these companies considering at least 3 years to forecast for future years.
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Best Speciality Chemical Stocks in India 2023
| Stock Name | ROCE | PE Ratio | Debt Equity Ratio |
|---|---|---|---|
| Alkyl Amines Chemicals Ltd | 29.32 | 63.87 | 0.02 |
| Navin Fluorine International Ltd | 17.29 | 82.21 | 0.00 |
| Vinati Organics Ltd | 23.45 | 63.36 | 0.01 |
| SRF Ltd | 23.85 | 36.47 | 0.36 |
| Balaji Amines Ltd | 40.87 | 25.74 | 0.00 |
| Gujarat Fluorochemicals Ltd | 22.38 | 34.74 | 0.36 |
| Atul Ltd. | 18.18 | 43.33 | 0.03 |
| Galaxy Surfactants | 15.19 | 29.80 | 0.22 |
| NOCIL | 15.47 | 19.44 | 0.00 |
| Aarti Industries | 19.5 | 43.4 | 0.070 |
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Bottomline
The chemical industry is the most diverse, with over 80,000 commercial chemical products. It is one of India’s largest industries, worth approximately $100 billion. The chemical sector is expected to grow to $304 billion by 2025. It should be noted that in 2017, the industry contributed approximately $2.6 trillion to our country’s GDP, generated $ 30 billion in taxes for the government, and employed over 2 million people across India.
Overall, the chemical sector is expanding at a compound annual growth rate of around 8%. Chemicals are in high demand in food processing, pharmaceutical, construction, automobile, and other industries.
These stocks have been selected on the basis of decent price projections over the next 1 year. This is just a recommendation but the returns are totally dependent on the market risk so suggest picking a stock that meets your investment horizon and risk appetite.
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FAQs
You can pick any of the above stocks if you are bullish on the speciality chemical segment.
1) Earnings Per Share (EPS) have been increasing over the last five years.
2) Price-to-Earnings Ratio (PE) – Lower than competitors and the industry average.
3) Price to Book Ratio (PBV) – Lower than competitors and the industry average.
4) The debt-to-equity ratio should be less than one (preferably 0.5 or zero).
5) ROE should be greater than 15%. (Last 3 Yrs Avg)
6) Price to Sales Ratio (P/S) – A lower number is preferable.
7) Dividends have been increasing over the last five years, so the current ratio should be greater than one.
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