Chemicals
Business model
Indian chemicals span three very different sub-segments:
1. Commodity chemicals - basic industrial inputs (caustic soda, soda ash, fertiliser intermediates). Cyclical, low-margin, price-takers. Global supply-demand drives everything.
2. Specialty chemicals - application-specific products sold to fewer customers in higher-value chains (agrochem actives, dyes, pharma intermediates, electronic chemicals). Margins higher (18-25% EBITDA), barriers from process know-how and customer qualification.
3. Performance / fine chemicals - patented or highly-engineered molecules sold under multi-year contracts. Margins highest (25-35% EBITDA), customer-stickiness extreme.
The growth narrative of the last decade has been China+1 - global customers diversifying away from China to Indian suppliers. Specialty and fine-chem players are the biggest beneficiaries.
Key metrics
- Revenue mix by sub-segment (commodity / specialty / fine)
- EBITDA margin - wide spread across sub-segments (8-30%)
- Capacity utilisation - operating leverage driver
- Capex programme - most specialty players run multi-year capex cycles
- Export share of revenue - China+1 winners typically 50-70% exports
- R&D as % of revenue - 2-5% for specialty; higher for innovator molecules