2 Specialty Chemicals Stocks for Long Term Holding

  • Stock Market Analysis
  • Editors Pick

Specialty chemicals are materials that are consumed based on their function or performance. These chemicals can be specific molecules, or a blend of molecules called formulations. Hence, at times, they are referred to as formulation chemicals or performance chemicals. For an extended period, China was a dominant player in specialty chemicals manufacturing and sales. However, the Covid-19 pandemic proved to be disruptive to the global specialty chemicals sector. Environmental concerns in China, supply chain obstacles, and the ‘shift-away-from-China’ strategy of international players in the industry ushered a wide range of opportunities for the Indian specialty chemicals companies.

Specialty chemicals are used to boost agricultural, construction, and pharmaceutical products processing. In addition, they are also consumed in chemical and intermediates processing, food processing and ingredients for household, coatings and paper trading, and transportation. Covid appropriate behavior has changed our surroundings, directly benefiting specialty chemical companies. Increased and continuous use of disinfectants, sanitizers, and demand across the globe will hold up the need for these chemicals. The Indian chemical industry has accumulated exceptional capabilities over the last few years. They have steadily moved up the value chain and consolidating their positions. We scanned the population of specialty chemical manufacturers and came up with two stocks that are an excellent long-term bet.

1. Deepak Nitrite Ltd (NS: DPNT )
Headquartered in Vadodara, Gujarat, Deepak Nitrite is a manufacturer of multi-product chemical intermediates. The company’s product portfolio and business segment include Basic Chemicals (17.3% revenue), Fine & Specialty Chemicals (17.5% revenue), Performance Products (6.9% revenue), and Phenolics (58.3% revenue). Fine & Specialty Chemicals revenue jumped 31% to Rs 766.5 crore in FY2021 from Rs 585.3 crore in its previous fiscal riding on agrochemicals industry growth. The segment’s capital expenditure jumped 253% during the same period.
In the last couple of quarters, the company has increased its market share in most of its product portfolio. Plus, it has also leaned towards medium-and long-term contractual agreements that will better utilize its manufacturing platforms. DNL has acquired land for future expansion at most of its present operating locations. The Indian chemical industry, worth $178 billion in 2019, is estimated to grow at 9.3% CAGR to $304 billion by 2025. Specialty chemicals account for 22% of the total chemicals and petrochemicals market in the country. Although DNL’s stock skyrocketed 257.2% over the last 12 months, it remains a long-term bet.

2. Polyplex Corporation Ltd (NS: PLYP )
Polyplex Corporation is one of the top manufacturers of polyester (PET) film in the world. The company’s polyester capabilities cover both thick and thin PET film in multiple ranges of thickness and surface properties, including an array of applications. Polyplex’s broad business portfolio also consists of BOPP, Blown PP/PE, and CPP films produced in state-of-the-art plants with economic size. The company is contemplating a new BOPP film line in Indonesia and expanding the recycling unit in Thailand. In addition, it is also mulling expansion of Blown PP film line in Thailand & Turkey and new offline coating line in Turkey.

Thin PET film constituted 60% of Polyplex’s business segment-wise revenue in FY2021. The company has been one of the lowest-cost manufacturers of thin PET film globally, with almost 100% capacity utilization. The worldwide demand for thin PET film is expected to grow steadily over the next four years. Increasing urbanization, e-commerce growth, rising environmental awareness should drive the direction of thin PET films in the times ahead. Promoters have marginally raised their stake in the company over the last two years. Polyplex has consistently paid dividends every year since 1993-94. The robust product portfolio, market-leading position, healthy financials, expanding margins make the stock a long-term investment.

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  • Madhusudhan Harihar @Madhusudhan Harihar
    Gujarat Flurochem
    Like 5
  • Dipak Tanna @Dipak Tanna
    Deepak Nitrite 10000 plus in next 5 years for sure
    Like 5
    • chinmay pattanaik @chinmay pattanaik
      Like 5
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      100
  • Brajesh Prajapati @Brajesh Prajapati
    Its long term investments
    Like 3
  • Raka Jat @Raka Jat
    excellent
    Like 0
  • Mukul Narayan @Mukul Narayan
    Both are on the ever high position. And as per Stochastics, its in Over Bought level above 80. Though the companies have good growth potential, my feeling is that the price is going to come down. Higly risky.
    Like 17
  • Ranjeet Sharma @Ranjeet Sharma
    Chamcon spaciaylty
    Like 6
  • Tarun Sharma @Tarun Sharma
    What about Aarti indus
    Like 9
  • SURYANARAYANA RAJU @SURYANARAYANA RAJU
    chambond
    Like 2
  • Akhilesh Mishra @Akhilesh Mishra
    sir what about vinati organic and navin flurine
    Like 5
  • Lovekesh Lovekesh @Lovekesh Lovekesh
    Clean Science
    Like 13
  • Keshav Maheshwari @Keshav Maheshwari
    Jubilant Ingreva
    Like 9
  • Yuvraj singh Shekhawat @Yuvraj singh Shekhawat
    Laxmi organics
    Like 14

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