After a combined efficiency in Q1FY26, expectations for Q2FY26 are muted. The second quarter is seasonally weak for many bulk and non-agrochemical companies. For agrochemical firms, in the meantime, extra rainfall throughout key Indian states probably disrupted crop-protection sprays, hurting demand. That, coupled with weaker exports, following pre-tariff shopping for in Q1, are additionally anticipated to weigh on Q2 earnings efficiency.
Besides some pockets, newest chemical costs tendencies are discouraging because the dynamic tariff situation has led to a pause in investments by end-user industries, affecting specialty chemical companies.
“Tariff is relevant on a variety of main merchandise exported to the US, like R32/R125 for SRF, Navin Fluorine Worldwide (NFIL), and Gujarat Fluorochemicals (GFL), on methyl methacrylate (MMA) for Aarti Industries, and on 2,4 D for Atul (Ltd). We’ve witnessed peaking of R32 costs in export markets, notably the US, and therefore proceed to be cautious about refrigerant gasoline gamers like SRF, NFIL, and GFL,” stated Emkay International Monetary Companies report dated 20 September.
For bulk chemical firms Aarti and Atul, Emkay sees a gradual earnings restoration. A bulk chemical is produced on a big scale because it serves as a basic uncooked materials or intermediate for a lot of specialty chemical substances and shopper merchandise.
Bleak outlook
Sentiment has additionally been weighed down by bleak commentary from giant world gamers.
“US firms Dow Chemical and Eastman Chemical not too long ago downgraded steering for Q3CY25, citing gentle demand from the buyer durables and constructing and building sectors in addition to weak spreads in chemical intermediates akin to acetyls,” stated September Kotak Institutional Equities report dated 22 September.
Suppliers of chemical intermediates are additionally indicating a slowdown of demand from world agrochemical clients. Kotak factors out, this might be probably because of each the front-loading of ordering that occurred previously few months forward of US tariffs and now the precise affect of the tariffs on economics and end-demand.
Shares of key specialty chemical substances firms are down 5-26% to this point in 2025. H2FY26 is predicted to be comparatively higher than the primary half, as readability on the affect of tariffs on earnings and outlook emerges, however a fast rebound appears unlikely.
