27 Jan , 2022 By : monika singh
NEW DELHI: The chemical sector has fast emerged as a great wealth creator on Dalal Street, hence it will be in focus on February 1 when Finance Minister Nirmala Sitharaman announces Union Budget 2022.
The sector has been in focus following the China 1 policy adopted by companies across the world. Moreover, recent fertilizer shortages have also kept agrochemical companies in the headlines.
Analysts expect higher fertiliser subsidy, inclusion of the section in the performance linked incentive (PLI) scheme and increase in farm credit limit, among others. If these demands are met, the sector may get another phillip.
“Fertiliser subsidy is likely to be higher with the government earmarking it at Rs 1.4 lakh crore. This would compensate fertiliser companies for selling products at lower than market prices to farmers despite sharply elevated raw material prices,” said Axis Securities.
“The inclusion of chemicals under the PLI scheme and providing financial support or incentives for capacity addition will reduce dependence on imports to the specialty chemical companies under the 'Make in India' program.”
Edelweiss Securities said industry wish list includes subsidy allocation towards urea and nutrient-based fertilisers. This will be positive for fertiliser players given most of them have been facing constraints in passing through raw material costs to end customers, it added.
Another demand from the industry is increase in farm credit limit given sharper focus on agri-infrastructure in the wake of the repeal of farm laws, which again will be positive for overall industry.
Chemical sector investors will also keep an eye on some announcements from other sectors that chemical companies supply raw material to.
“Any relief or push to the infrastructure and the housing sector may prove to be beneficial for the chemical companies catering to the paints and coatings segment. Any relief to the automobile sector may benefit the companies in the rubber chemicals and carbon black sectors,” said Axis Securities.
Another demand is rationalisation of duty structure for raw materials, intermediates and finished products for the chemical sector to boost domestic production as part of Atmanirbhar Bharat initiative.
Analysts believe Balaji Amines, Jubilant Ingrevia, PI Industries, Dhanuka Agritech, Rallis India are among those stocks that investors should keep an eye on.
0 Comment