India’s agrochemical sector is heading into a mixed second half of the year as domestic demand remains soft but export orders show strength, according to Ranjit Cirumalla, Vice President – Research at IIFL.
Cirumalla summarised the first half as “headwinds at home, tailwinds abroad”, noting weak domestic trends and better performance in exports. He said early and prolonged monsoons boosted sales sharply in quarter one, but “excessive rains did impact the consumption” in quarter two, dragging results lower.
On the export side, he said companies with refrigerant-linked products performed well, and volume recovery has begun globally. He added that the worst of the inventory correction cycle is behind the industry, but pricing remains under pressure. “At the aggregate level, we still like that in a negative zone,” he said, though some agrochemical prices have shown a marginal increase recently.
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Looking ahead, Cirumalla expects stronger export-driven growth in H2. He said domestic consumption will not fully recover this year because kharif contributes 65-70% of demand and is already done. “We will have to look forward to the next year,” he added for domestic players.
In contrast, the export season is weighted toward the second half, especially in North America and Latin America. “The second half should be much better than the first half,” Cirumalla said, particularly for companies exposed to these regions.
Trade disruptions remain a key factor. He pointed out that US tariffs have hit profitability for several exporters, but some companies have rerouted shipments or benefitted from strong performance in other divisions. Cirumalla also flagged increased dumping of Chinese products into Brazil and India, which could hurt local manufacturers.
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However, he said outsourcing and new-molecule opportunities continue to offer support. “The companies that are able to…win new contracts have done very well and are expected to do well,” he noted.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
Cirumalla summarised the first half as “headwinds at home, tailwinds abroad”, noting weak domestic trends and better performance in exports. He said early and prolonged monsoons boosted sales sharply in quarter one, but “excessive rains did impact the consumption” in quarter two, dragging results lower.
On the export side, he said companies with refrigerant-linked products performed well, and volume recovery has begun globally. He added that the worst of the inventory correction cycle is behind the industry, but pricing remains under pressure. “At the aggregate level, we still like that in a negative zone,” he said, though some agrochemical prices have shown a marginal increase recently.
Also Read | Ambit’s Dhiraj Agarwal sees a slow climb for markets, says valuations back in focus
Looking ahead, Cirumalla expects stronger export-driven growth in H2. He said domestic consumption will not fully recover this year because kharif contributes 65-70% of demand and is already done. “We will have to look forward to the next year,” he added for domestic players.
In contrast, the export season is weighted toward the second half, especially in North America and Latin America. “The second half should be much better than the first half,” Cirumalla said, particularly for companies exposed to these regions.
Trade disruptions remain a key factor. He pointed out that US tariffs have hit profitability for several exporters, but some companies have rerouted shipments or benefitted from strong performance in other divisions. Cirumalla also flagged increased dumping of Chinese products into Brazil and India, which could hurt local manufacturers.
Also Read | NSE IPO awaits SEBI nod; options market share rebounds after expiry shift, says business chief
However, he said outsourcing and new-molecule opportunities continue to offer support. “The companies that are able to…win new contracts have done very well and are expected to do well,” he noted.
For the full interview, watch the accompanying video
Catch all the latest updates from the stock market here
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