Planning to spot wealth creators in chemical space? PI Industries, Atul could give over 20% return each

India’s chemical and petrochemical industry is charting a path towards becoming a global powerhouse, integral to the nation’s economic vision of a USD32 trillion economy.

This ambitious journey hinges on a dynamic chemical sector, with manufacturing output projected to increase by an extraordinary 50 times, reaching USD6 trillion. This growth will be driven by strategic partnerships, investments in sustainable practices, and innovation across the chemical value chain.

At a recent industry event, experts underscored the critical role of collaboration to advance India's leadership in sustainable chemical solutions. A notable goal is capturing 17% of the global chemical market by 2030, a vision outlined by the Department of Chemicals and Petrochemicals.

As part of this plan, India aims to double its chemical exports over the next decade, focusing on emerging fields like bio-plastics, recycling, and environmental sustainability.

These efforts are strongly backed by the Start-up India initiative, which will play a key role in catalysing innovation and supporting new businesses in the chemical sector.

Regional leaders such as Gujarat, Madhya Pradesh, and Odisha are leading the way in establishing India’s chemical industry as a global player.

Gujarat currently contributes 35-40% of India’s chemical exports, thanks to favourable policies and incentives like the Production-Linked Incentive (PLI) scheme, which boost self-reliance and promote manufacturing growth.

Madhya Pradesh is also gaining traction, with its Bharat Petrochemical Project in Bina worth INR 500 billion, solidifying the state as a significant contributor to India's chemical exports and pharmaceutical production.
Meanwhile, Odisha’s transformation from a mining-centric economy to a key chemical hub is underway, with its advantageous geographic location, resources, and industry-friendly policies drawing substantial investment.

The sector is set to grow from its current valuation of USD220 billion to USD300 billion by 2029, with an eye on hitting USD1 trillion by 2040.

Currently the sixth-largest globally and the fourth-largest in Asia, India’s chemical industry plays a vital role in supporting sectors from agriculture to healthcare, contributing 8% to India’s manufacturing GDP.

Looking ahead, the Indian government’s policies are anticipated to provide further momentum, including sector-specific incentives and frameworks for chemicals and pharmaceuticals.

There is a strong focus on innovation and sustainability, with investments in research that will enable the sector to meet evolving global standards and support the move towards a circular economy.

India’s chemical sector is positioned for rapid expansion and global leadership, backed by state government support, private investments, and a commitment to sustainable practices.

With the government’s backing and strategic partnerships, India’s chemical industry is set to make a significant impact on the global economy while fostering self-reliance and sustainable growth.

PI Industries: Buy| Target Rs 5470| LTP Rs 4487| Upside 21%

PI has levers in place to sustain near-term growth, led by: 1) consistent growth momentum in the CSM business 2) product launches in the domestic market and 3) the recent acquisition in the pharma API and CDMO segments, which is expected to be one of the key growth pillars for the company.

We expect a CAGR of 16%/18%/13% in revenue/EBITDA/adj. PAT over FY24-27.

Atul: Buy| Target Rs 9955| LTP Rs 7853| Upside 26%

Atul is undertaking various projects and initiatives aimed at improving plant efficiencies, expanding its capacities for key products, debottlenecking its existing capacities, capturing a higher market share, and expanding its international presence.

It is set to commission its liquid epoxy resins plant of 50ktpa capacity in FY25 (revenue potential of ₹8b). With a projected revenue CAGR of 13% and PAT CAGR of 39% from FY24-27, Atul is well-positioned for robust growth, supported by strategic capacity expansions and improved market conditions in its sub-segments.

(The author is Head – Research, Wealth Management, Motilal Oswal Financial Services Ltd)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)