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Specialty chemical manufacturers’ revenue growth likely to moderate in FY27: Crisil

03 Jul 2026 Evaluate

Crisil Ratings in its latest report has said that revenue growth of India’s specialty chemical manufacturers is likely to slow by 200 basis points (bps) to around 6 per cent in the current financial year (FY27) from around 8 per cent growth recorded in each of the previous two financial years. It said that while domestic demand is expected to support growth, weak exports due to supply disruptions and cautious overseas buying are likely to weigh on overall performance. It said trade flows could take a couple of quarters to normalise if the easing in the West Asia conflict sustains. 

The report also expects industry’s operating margins to narrow to 14-14.5 per cent in FY27 from around 16 per cent in the previous fiscal, primarily because of subdued exports. However, the impact will vary across segments depending on raw material exposure and pricing power. It said domestic sales account for nearly two-thirds of industry revenue, with agrochemicals contributing around 30 per cent followed by dyes and pigments (22 per cent) and flavours and fragrances (14 per cent). 

On profitability, the report said pressure will vary by raw material exposure, including crude-linked ethylene, propylene, BTX and fluorine-based inputs, despite diversified end-user demand. Ethylene and propylene manufacturers are likely to face sharper pressure because of higher crude linkage and limited pricing power. BTX makers may fare better, supported by value-added products and moderate pricing power. Fluorine-based chemistries should remain relatively resilient, aided by niche positioning and stronger passthrough ability. It said recent custom duty exemptions on select petrochemical inputs may provide limited relief but are unlikely to significantly offset broader raw material cost volatility.

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