The Indian specialty chemicals sector continues to be supported by healthy domestic demand, volume-led growth and ongoing capacity expansions across key product segments. While demand conditions have improved across several end-user industries, global overcapacity, aggressive competition from Chinese suppliers, tariff-related uncertainties and geopolitical risks continue to limit broad-based pricing recovery.

• Agrochemical production remains stable in FY2026 supported by domestic offtake as exports moderate by about 12% YoY. Performance has remained healthy in FY2026, with excess rainfall causing flooding and crop losses. Operating margins may moderate mildly in the near term as rising raw material costs, limited pass through to customers and monsoon-related demand uncertainty offset the benefits of volume recovery
• The credit profile of sector incumbents is likely to remain healthy, given the comfortable debt levels and improving cash generation. With modest incremental debt uptake, credit metrics are likely to remain stable, with TD/OPBDITA projected at 1.3x in FY2027 compared to 1.5x in FY2026.