04 Jan , 2022 By : Kanchan Joshi
Indian Specialty chemical Industry, against the fear of margin squeeze caused by elevated input prices, is all set to deliver strong earnings growth driven by steady recovery in demand from the lows of Covid and industrial manufacturers’ ability to pass on the higher input cost to customers, said brokerage house PhillipCapital in a note.
The brokerage and research firm's top stock picks in the specialty chemicals space are Aarti Industries (target price: Rs1,200) and Camlin Fine Sciences (target price: Rs250) and has a Buy rating on the two counters.
“Indian specialty chemical industry is likely to report robust sales growth on the back of – recovery in demand and better realization led by cost push. Moreover the sequential improvement in product prices reflecting the ability to pass on the higher cost is incremental positive," the note stated.
On the other hand, it has upgraded Atul Ltd's recommendation to upgrade with a target price of Rs9,000. It has a Sell rating on SRF Ltd (target price: Rs2,060) and Neutral tag on Vinati Organics shares with a target price of Rs1,900.
Most of Indian specialty chemical peers have either integrated their product portfolio or added downstream products in the recent past, which coupled demand recovery and firm prices drives a healthy earnings momentum in Q3, PhillipCapital highlighted in a note on Tuesday.
The brokerag expects Vinati Organics, SRF, Camlin, Aarti Industries will be delivering strong earnings growth of 59%, 56%, 52%, and 34% year-on-year (YoY) respectively in Q3.
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