More Stories

Informist, Friday, Mar. 28, 2025

MUMBAI – The operating margin of Indian specialty chemical makers is expected to contract nearly 150 basis points to 14-15% in the financial year 2025-26 (Apr-Mar), against an earlier projection of 15.5-16.0%, Crisil Ratings said in a press release Friday. The expectation for FY26 is the same as the last two fiscal years, the ratings agency added.

According to Crisil Ratings, trade-related uncertainties stemming from US tariff actions may affect the recovery in profitability of the domestic specialty chemicals sector. The tariff threats and continued pricing headwinds may continue to hurt realisations of the companies. Despite increase in volumes, aggressive dumping of Chinese goods could erode the pricing power of domestic manufacturers, and profitability could take a hit, Crisil Ratings said. An additional 20% tariff on Chinese chemical imports into the US has increased the risk of a further decline in realisations as it may increase the redirection of excess inventory to India, the ratings agency said.

"With realisations under pressure, the Indian specialty chemical sector's 7–8% revenue growth next fiscal will be largely volume-driven," Anuj Sethi, senior director of Crisil Ratings, was quoted as saying in the release. Domestic revenues, which contribute 63% to the total revenues, are expected to grow 8–9%, while exports, may just see a 4–5% growth.

"The anticipated drop of nearly 150 bps in profitability will directly impact the return on capital employed, which is already expected at a decadal low of over 13% this fiscal and the next, compared with 16-18% before the pandemic," Poonam Upadhyay, director of the ratings agency, said in the release. "While debt-to-EBITDA, or earnings before interest, tax, depreciation, and amortisation is expected to sustain below 2 times for specialty chemical makers rated by us, persistent profitability pressures can weaken earnings and debt protection metrics, and affect credit profiles," Upadhyay said.  End

Reported by Akshita Kumar

Edited by Nishant Maher

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.