Best Chemical Stocks in India

12 January 2023
9 min read

The development of a nation's industrial and agricultural sectors depends heavily on its chemical industry. In addition, it supplies raw materials for many downstream industries, including papers, paints, textiles, soaps, detergents, and more.

Depending on their uses and efficacy, speciality chemicals may be used alone or in combination with several other chemicals to contribute to the creation of any product effectively.

Additionally, this industry serves a significant variety of final-use application industries and encompasses 80,000+ products. The Middle East is the world's primary source of petrochemical feedstock, and India's proximity to this region allows for economic scale benefits.

In India, the chemical industry employs over 2 million people. Based on their use in the end-user industries, speciality chemicals can be further divided into various categories, including personal care materials, dyes and pigments, agrochemicals, polymer additives, water chemicals, textile chemicals, and application-driven segments etc.

India contributes roughly 16% of the world's total production of dye-related products and dye intermediates, making it a significant global supplier of dyes. In addition, these products are crucial to many other industrial sectors, including textiles, food, cosmetics, agriculture, automotive, and aerospace.

Due to India's high demand for chemical products, chemical sector stocks are also likely to rise. In addition, the middle-class population is swiftly growing, which significantly impacts the need for food, clothing, and transportation.

As a result of the end-user industry's expansion driving the demand for speciality chemicals in the nation and boosting the share of Chemical Stocks, we have compiled a list top 10 chemical stocks in India in 2023 in this blog.

Diversifying an investor's portfolio will lower risk exposure and increase profit potential. The Indian chemical platform has become very well-known internationally in recent years. The Indian chemical industry has grown and is now the focus of several other sectors, including agriculture, pharmaceuticals, food processing, and others. These chemical businesses have outperformed several industries.  

Further, let us look at the best chemical stocks of 2023.

List of the Best Chemical Stocks in India 2023

Following is a list of some of the best chemical stocks to buy -

S.No. 

Best Chemical Stocks in India

1.

Super Crop Safe

2.

Ganesh Benzoplast

3.

Chemfab Alkalis

4.

Jayant Agro-Organics

5.

Jyoti Resins & Adhesives

6.

Balaji Amines

7.

Thirumalai Chemicals

8.

Meghmani Organics

9.

Deepak Nitrite

10.

Grauer & Weil (India)

Factors to Consider Before Investing in Chemical Stocks

  • A High Level of Competition

When it comes to bulk, commodity, and integrated chemicals, an investor would observe that one company's products are indistinguishable from those of another company. Because of this, a customer can quickly switch from chemicals made by one manufacturer to chemicals produced by another.

The producers of bulk/commodity/integrated chemicals face fierce competition due to the commoditization and lack of differentiation of their products, and they have no pricing influence over their clients.

In the market, they are price takers because the lowest-cost producer establishes the market price, and every other producer is obligated to match it to keep their customers from switching to the lowest-cost producer.

  • The Economies of Scale Are High for Low-Cost Producers

As said in the above point, due to the non-differentiable nature of their products and the ease with which customers can switch suppliers, resource chemical companies compete with one another on price.

The technology to produce common chemicals is also well-developed and widely accessible. Therefore, becoming the lowest-cost manufacturer on the market is the primary source of competitive advantage for any producer of commodity chemicals.

This is so that everyone can benefit in the long run because the lowest-cost producer establishes the market price, and everyone else must match it to succeed. 

  • Capital Intensity

As mentioned, commodity chemical companies typically have a sizeable manufacturing facility to take advantage of economies of scale and run profitable operations. It is thought that a commodity or integrated chemical manufacturer must reach an actual minimum threshold before it can even be pertinent to its industry. Therefore, being a top player where efficiencies of scale help to decrease the cost of manufacturing is crucial for the commodity chemical industry.

An investor would understand that a company operating in the commodity chemical sector must build a sizeable plant to maintain operations, necessitating a significant investment.

  • Exhaustive Survey

An investor would understand that chemical producers—particularly the bulk chemical players—need to be highly cost-competitive to create stable profit margins. Earlier, we mentioned that businesses primarily use economies of scale to become low-cost manufacturers of bulk chemicals.

The competitive advantage that integration gives chemical producers increases their profit margins. Because manufacturers can produce many intermediate products internally, shielding them from the volatility of these products' open market prices, a higher level of integration also aids in lowering the volatility of their earnings. Especially for raw materials that do not see a lot of trading or are challenging to come by, integration of operations helps businesses avoid the risk of unavailability of raw materials.

Top Chemical Stocks in India: Overview

Here is a brief overview of some of the best chemical share in India-

1) Super Crop Safe

Super Crop Safe Limited was established as a private limited company in Gujarat on February 9, 1987, by the Companies Act 1956, to grow as a trading company.

On January 16, 1992, a special resolution was passed to change the company's status. A new certificate of incorporation reflecting the name change was released by the Registrar of Companies, Gujarat, on March 20, 1992. The company began marketing a wide variety of pesticides created by M\s Super Industries, a member of its group. It is a renowned and one of the top chemical companies in India.

2) Ganesh Benzoplast

The business of providing climate-controlled storage facilities for bulk liquids and chemicals at different ports in India is carried out by the Indian company Ganesh Benzoplast Limited.

A variety of speciality chemicals, food preservatives, and industrial lubricants are produced and exported by the company. The Liquid Storage Terminal (LST) Division and Chemical Division are the two segments through which it operates.

3) Chemfab Alkalis

The first membrane cell plant to manufacture Chloralkali in India was built by Chemfab Alkalis Limited (CCAL), which has also established a long history of environmental responsibility and workplace diversity.

It is amongst the top 10 chemical companies in India. Also, one of the first significant chemical organizations in India to successfully introduce and implement novel technologies and maintain its leadership position is CCAL.

Since its inception, CCAL's operations have benefited from significant investments in processes and quality improvement, keeping them at the forefront of technology.

4) Jayant Agro-Organics

Jayant Agro-Organics Limited was established in 2000. It has a fully modernised, cutting-edge technology castor seed crushing unit. The plant is situated in Banaskantha, one of Gujarat's principal castor-growing regions, producing 75% of the country's castor seed. The plant is conveniently connected because it is close to the Kandla Port, from which we export bulk oil, and is located on a state highway.

As a joint venture partner with Jayant Agro-Organics Limited in 2013, the multinational chemical company Arkema acquired a stake in Ihsedu Agrochem. The joint venture aims to produce different industrial and speciality grade castor oil.

5) Jyoti Resins & Adhesives

Founded in 1993, Jyoti Resins & Adhesives Ltd. is a renowned company that operates in the chemicals industry. One of Jyoti Resins & Adhesives Ltd.'s key product/revenue segments is wood adhesives. Hence, it is often a top choice in the chemical sector for numerous investors trading in the Indian stock market.

6) Balaji Amines

Balaji Amines Limited (BAL), one of India's top producers of aliphatic amines, was founded in 1988 to meet the expanding demand for speciality chemicals with a higher perceived value.

In 1989, BAL started producing methylamines. Subsequently, it added factories to create ethylamine and other methylamine and ethylamine derivatives. As a result, BAL has consistently increased capacity and improved processes to give customers high-quality goods at the lowest possible prices.

Amine technology is a closely guarded process worldwide, with only a small number of companies having access to it. However, BAL tested an indigenously created technology for the first time in India and continued to develop it over time.

7) Thirumalai Chemicals

Public limited company Thirumalai Chemicals Limited was established in 1972, often considered one of the top chemical share. Based on technology provided by Ch.F.Von Heyden and Davy Power Gas, Germany, it was established to manufacture PAN with an initial installed capacity of 7500 mts per year. In 1976, the plant started producing on a commercial scale.

8) Meghmani Organics

Gujarat Industries was founded as a partnership company in Gujarat to produce pigments in 1986. By 1995, Gujarat Industries had become Meghmani Organics Limited, a joint stock company thanks to its high productivity and profitability. Since then, Meghmani Organics Limited has expanded its line of products to include various pesticides and other pigments.

Meghmani Organics Limited, a top producer of pesticide and pigment products in the nation, has won numerous prestigious honours for its exceptional commercial success.

9) Deepak Nitrite

Another company in India that manufactures chemicals is Deepak Nitrite Ltd. The company's manufacturing facilities are in Hyderabad in Telangana, Roha and Taloja in Maharashtra and Nandesari and Dahej in Gujarat.

A wide range of chemicals, including agrochemicals, colourants, rubber, pharmaceuticals, speciality, and fine chemicals, are produced by Deepak Nitrite.

10) Grauer & Weil (India)

Grauer & Weil (India) Limited, also known as Growel, has been a trailblazer in the surface finishing industry. One of the few businesses in the world and the only one in India, Growel provides comprehensive corrosion protection solutions for all substrate types and business sectors.

In 2016, Growel became the first provider of surface finishing solutions in India to receive the AS 9100 certification.

Conclusion

India's chemical stocks are increasing due to the growing demand for chemical goods. In addition, India is now concentrating on many chemical product consumers due to China's ban on activities related to the chemical industry.

Due to the increase in market share both domestically and internationally, stockholders see good returns on their investments.

Hence, make sure to choose well-established businesses that offer solid returns when investing in the stocks of companies in the chemical sector.

To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS

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Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.

To read the RA disclaimer, please click here
Research Analyst - Bavadharini KS

Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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