Specialty Chemicals Sector: Q3FY19 Earning Review

Speciality chemicals form raw materials for a variety of products including detergents, soaps, cosmetics, etc. The Indian companies present in this sector are likely to perform better in the third quarter of FY19. This will be primarily aided by better and sustained product prices, good product mix and moving up in the value chain. The sharp drop in the crude oil prices will have a partial impact in this quarter’s result. Nevertheless, full impact will be visible only in the Q4FY19.

Leading players in the sector were able to sustain or improve the product prices on both sequential as well as on yearly basis, despite a fall in crude and other raw material prices. Indian currency depreciated against key currencies yoy in Q3FY19, hence, we will see better realisation also. This along with higher demand will lead to higher earnings growth.

The long-term growth of the sector also seemed to be intact as the Chinese government’s crackdown on factories flouting emission norms has severely affected the global supply of chemicals and opened up opportunities for Indian speciality chemical companies.