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Specialty chemicals gave double-digit returns in the last 5 years: Here are the top bets from Emkay Research

Updated : October 11, 2019 03:01 PM IST

Emkay believes that the automotive slowdown is likely to impact the chemical segment.

The brokerage believes Q2FY20 will be one of the sluggish quarters for chemical companies with lower realisation and muted demand.

One of the sectors that continued to give returns over the years is specialty chemicals business. Known to be a safe sector as its demand is expected to increase in future, it has delivered double-digit returns in the last five years. However, with the auto sector slowdown and overall economic crisis, specialty chemical stocks have also started to feel the heat.

Emkay, in its recent research report said, “The automotive slowdown is likely to impact refrigerant gas, soda ash and technical textile businesses in the chemical space.”

The largest specialty chemical maker SRF delivered 58.30 percent returns in one year, but Vinati Organics gave the most returns of about 84.43 percent.

specialty chemicals

Specialty Chemicals

In the case of SRF, the report said R-gas revenues are likely to be muted and the technical textile revenue should decline after exiting its subsidiary business. The strong recovery in SRF’s specialty chemical segment after the plant shutdown issues in Q1FY20 should aid margin improvement.

The brokerage believes Q2FY20 will be one of the sluggish quarters for chemical companies with lower realisation and muted demand. However, H2FY20 should be better as things have started to improve. New facilities from most companies coming up in H2FY20 will be looked as positive amid improving sentiments.”

Investors should remain positive on SRF, Navin Fluorine and Camlin Fine Sciences due to their strong outlook, while GHCL and Apcotex Industies look good with cheap valuations. Remain overweight on SRF and Navin, the report added.

Specialty chemicals gave double-digit returns in the last 5 years: Here are the top bets from Emkay Research

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