Near-term worry to be acid test for speciality chemical companies

Kotak Institutional Equities believes that Q3 for speciality chemicals will be a mixed bag, with weak earnings from most players in the crop protection space

The October-December quarter (third quarter, or Q3) performance of chemical companies is likely to be muted. Some of the issues which weighed on the financials of key players last year, such as supply-side disruptions, concern about raw material availability, and higher power and freight costs, are expected to continue in the near term. Within the chemicals space, brokerages expect companies catering to the discretionary segments to be more impacted than others.

Companies exposed to discretionary applications, such as dyes and pigments, automotive, flavours and fragrances, and polymers, will face several headwinds in the near term, observe analysts, led by Ranjit