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Top 5 stocks in market size in chemical industry -2023

Written by - Marisha Bhatt

January 8, 2023 10 minutes

India is a major chemicals hub and has seen growing demand for chemicals in various sectors of the economy. The rising demand for chemicals in the country can be seen in the food-processing sector, personal care, home care, etc. The pandemic and the ongoing war have also created opportunities for the Indian chemicals sector to expand to new markets as the global companies are seen to move away from Chinese markets and de-risk their supply chains. 

Given below is a brief overview of the chemicals sector in India and the key stocks to watch out for in the industry. 

Sector review

Key factors 

  • The chemicals sector in India is a de-licensed industry barring a few hazardous chemicals and covers more than 80,000 commercial chemical products. 
  • India is the fourth-largest producer of agrochemicals and is the 14th largest exporter and
  • It  is also 8th largest importer of chemicals on the global level. 
  • Other milestones from this sector include India being the third-largest consumer of polymers and the 6th largest in the sale of chemicals across the globe. 

The various segments in the chemical industry include

  • Bulk or Basic Chemicals, 
  • Specialty Chemicals, 
  • Agrochemicals, 
  • Petrochemicals, and Bio-pharma Chemicals. 

Alkali chemicals comprise to have the largest share in the Indian chemicals industry (approximately 71%) followed by polymers (approximately 59%). This sector is also one of the strongest contributors to the GDP of the country and is expected to contribute US$ 300 billion by 2025 and is expected to grow at a CAGR of 9.3%. 

Progress of the sector

India has seen an increase to 4% from the previous 3% in the global markets in this segment. The SME sector in the country in this industry is also expected to have an increase in revenue between 18% to 23% in FY22. The past years also saw an increase of 33.75% YoY in the organic and inorganic chemicals exports reaching US$26.48 billion.  

Government Initiatives

The chemicals industry is one of the largest contributors to the country’s GDP and seeing the growing demand on the national and the international front, the government has taken many initiatives to boost the sector and generate more employment opportunities along the way. Some of the top government initiatives are highlighted below. 

  1. Mandatory BIS-like certification for imported chemicals to avoid sub-standard and cheap chemicals being dumped in the country. 
  2. Allocation of US$ 27.43 million to the Department of Chemicals and Petrochemicals under the budget of FY 22-23
  3. Plans to launch a production-link incentive system with 10-20% output incentives for the agrochemical sector under the 2034 vision of the government that aims to reduce imports, boost domestic production and attract more investments in the sector. 
  4. Other incentives in this sector include 100% tax exemption on export income for SEZ units for the first five years, 50% for the next five years thereafter, and 50% of the export profit that is invested back into the business for the next five years. This scheme is set to come into effect from 1st April 2020.
  5. To boost the ease of doing business in the country and to do away with unnecessary bureaucracy, the government has also proposed a single window clearance for central and state-level approvals.
  6. Under the revised PCPIR (Petroleum, Chemicals and Petrochemicals Investment Region) policy for 2020-2035, a combined investment of US$ 142 billion is targeted by 2025, followed by US$ 213 billion by 2030 and finally US$ 284 billion by 2035 in all PCPIRs across the country. This investment is expected to generate employment for approximately 33.83 lakh people.  

Investments and major announcements in the chemicals sector

Investments in the chemical sector have seen a huge increase from the national as well as the international front. Recognizing the growing importance of the chemicals industry in the country’s GDP, the government has increased the permissible levels of FDI in this sector to 100%. 

The total FDI inflow in chemicals other than fertilizers is to the tune of US$ 19 million in the period between April 2000 to March 2022 which accounts for approximately 3.3% of the total FDI inflow. . There has also been an increase in the interest from strong international players in this industry (Japan, Korea, and Thailand) to seek and expand supply chain solutions and ultimately move away from China. 

On the domestic front, IOCL has announced to invest US$ 495.22 million approximately in setting up India’s mega-scale maleic anhydride unit for manufacturing high-value specialty chemicals at its Panipat Refinery in Haryana. To meet the rising demand for raw materials used in the plastics and clothing industries, Nayara Energy has announced to set up 15-20 new integrated petrochemical plants and make them operational within the next decade. BPCL announced an investment to the tune of US$ 4.05 billion approximately for the improvement of petrochemical capacity and refining efficiencies over the next five years. There has also been an initial investment of approximately US$ 750 million for the current implemented stage by the Russian company Rosneft for a large-scale petrochemical production development program. 

Challenges in the Chemicals sector

Like any other sector, the chemicals sector in the country also has its own set of challenges that pose a strong hindrance to growth at a faster pace. Some of the key challenges faced by the sector are mentioned below. 

  1. Shortage of raw materials

The prime challenge for the chemicals industry is the timely availability of raw materials. The cost of the feedstock of thej raw material for the industry especially naphtha and natural gas at available at a cheaper rate in other countries like South East Asian Countries, the Middle East, China, etc, as compared to their cost in India. This increase in the cost of the raw materials is trickled down into the final cost of the product which makes it uncompetitive for the Indian manufacturers and traders.   

  1. Tough competition from imports 

Indian Government on account of many bilateral agreements with many nations has reduced the cost of imports from various nations. This has introduced an influx of quality chemicals at a cheaper rate which is a further blow to the Indian chemicals industry.

  1. Logistical issues

Most of the chemicals industry in India is located on the western coast of Gujarat due to its proximity to raw materials and ports. However, the demand for most of the chemicals comes from the southern and the eastern belt. This creates logistical issues and increases the transport cost which is at its peak given the rising crude prices. 

  1. Poor warehousing

India even today faces many connectivity issues like restricted access to railways, ports, adequate pipelines, etc. The warehouses for the chemicals also face poor infrastructure issues, lack of adequate power connection, and facilities in case of any disasters. This adds to the worries of the chemicals sector, ultimately affecting productivity and quality. 

  1. Lack of adequate investment in R&D

The chemicals sector is quite fragmented and has huge volumes coming from the small and medium enterprises sector. These businesses lack the financial support necessary for research and development in the sector that can result in innovation or improvement in the quality of output thereby ultimately losing out to the global competition.   

  1. Lack of skilled labour

Indian markets have faced the issue of lack of skilled labour in almost every sector. There need to be fundamental changes in the quality and the pattern of education provided at the grass root levels to tackle this problem. The lack of skilled labour in the chemicals industry leads to inadequate quality of production or increased time in the manufacturing process, decreased productivity, as well a lack of growth opportunities for the businesses. 

Future prospects in the sector

India has a huge chemicals belt in the southern and the western part of the country which will have a greater national and international exposure owing to the increased demand. India is also set to gain in the post-pandemic period on account of the supply chain disruptions in China and the growing trade conflicts between the West and China. The government of the country is also lending its crucial support to the sector in the form of incentives and tax breaks as well as the development of dedicated infrastructure under the PCPIR policy and investment for the same to the tune of US$276.46 million by 2035. 

Top stocks in the chemical sector based on Market capitalization

The key players in the chemicals sector in the country based on their market capitalization are highlighted below as of June 2022

  1. Pidilite Industries

Pidilite is the biggest name in the chemicals sector in the country and has a variety of products in segments like adhesives and sealants, construction chemicals, craftsmen products, DIY products, and polymer emulsions. The key details of the company are tabled below.

Market Capitalization Rs. 1,09,729 crores
PE Ratio90.87
Return on Equity22.42 (March 21)
Debt Equity Ratio0.04 (March 21)
Promotor’s Holdings69.94%
Share priceRs. 2158.35
Dividend Yield0.46%
  1. SRF

SRF is the second-largest chemicals company in the country in terms of market capitalization and was incorporated in 1970. The core business of the company is the manufacturing of industrial and specialty chemicals as well as having diversified portfolios that include Fluorochemicals, Specialty Chemicals, Packaging Films, Technical Textiles, and Coated and Laminated Fabrics. The key details of the company are tabled below.

Market Capitalization Rs. 64,075.85 crores
PE Ratio33.91
Return on Equity20.34 (March 21)
Debt Equity Ratio0.49 (March 21)
Promotor’s Holdings50.73%
Share priceRs. 2,161.65
Dividend Yield0.77%
  1. Gujarat Flouroch

Gujarat Flouroch was incorporated in 2018 after a demerger from GFL Ltd. and is now the third-largest company in the chemicals sector in terms of market capitalization. The company is a leading name in the production of Fluoro-polymers, Fluoro-specialities, Chemicals and Refrigerants in India as well as among the top five names in the fluoropolymers segment with exports to major markets. The key details of the company are tabled below.

Market Capitalization Rs. 30,337.82 crores
PE Ratio38.59
Return on Equity-6.15 (March 21)
Debt Equity Ratio0.45 (March 21)
Promotor’s Holdings66.08%
Share priceRs. 2,762.15
Dividend Yield0.00%
  1. Linde India

Linde India is a subsidiary of the UK-based BOC Group. The key segments of the business include the manufacture of industrial and medical gases and the construction of cryogenic and noncryogenic air separation plants. The key details of the company are,

Market Capitalization Rs. 27,584.76 crores
PE Ratio101.88
Return on Equity20.27 (March 21)
Debt Equity Ratio0.00 (March 21)
Promotor’s Holdings75.00%
Share priceRs. 3235.25
Dividend Yield0.42%
  1. Aarti Industries

Aarti Industries is a well-known name in the national and international chemicals market. The core business of the company includes the manufacturer of Speciality Chemicals and Pharmaceuticals that are further used in the manufacture of pharmaceuticals, agrochemicals, polymers, additives, surfactants, pigments, dyes, etc. The key highlights of the company are mentioned below.

Market Capitalization Rs. 25,478.60 crores
PE Ratio19.52
Return on Equity16.52 (March 21)
Debt Equity Ratio0.81 (March 21)
Promotor’s Holdings44.19%
Share priceRs. 703.25
Dividend Yield0.50%


The demand for chemicals across the globe is expected to increase by approximately 9% between 2020-2025. The future of the chemicals sector in India is quite bright which is supported by the government and the private sector through national and international investments. The exports in the country in organic and inorganic chemicals also grew by 106% which was also in tune with the Atmanirbhar Bharat Abhiyan. 


What is the FDI investment in the chemicals sector?

The government has permitted 100% FDI in the chemicals sector through the automatic route barring the case of a few hazardous chemicals.

What are the key segments in the chemicals sector?

The key segmentrs in the chemicals sector include Bulk or Basic Chemicals, Specialty Chemicals, Agrochemicals, Petrochemicals, and Bio-pharma Chemicals.

 What is the estimated growth rate of the specialty chemicals in the country?

The estimated growth rate of specialty chemicals in the country is approximately 11.7%. 

Who are the global leaders in the chemicals industry?

The global chemicals industry is dominated by China having the largest market share of 35% followed by Europe having a market share of 20% and the US which has a market share of 15%.

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