In past few years, agrichemical companies focused on exporting technicals have grown very well which has attracted more competition and a lot of companies are putting up large capacities. In FY23 so far, a lot of EC approvals have been granted, with sizes ranging from 100-1500 cr. I am sharing a few excerpts from a recent IIFL report.
From the above 2 figures, we can see 3500 cr.+ of ECs and capex projects. The entire profit pool of the listed agchem universe (ex of PI and UPL is <1000 cr.), so there is a lot of competition coming up for a small profit pie. Either profit pie has to explode or we are going into a supply glut.
Disclosure: Invested in a number of agchem cos (detailed portfolio here)
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