The Indian specialty chemicals sector could see an impact on profitability when U.S. President Donald Trump's reciprocal tariffs are imposed, noted global broking firm Citi Research.
Organic and miscellaneous chemical currently face a 10 percent tariff in India compared to the US average of 3 percent. Other key exports to the US and EU have tariffs averaging 5 to 6 percent.
Therefore, if a 7 percent tariff is imposed on Indian exports to the US, the estimated EBITDA impact would be 12 percent for PI Industries, 5 percent for Navin Fluorine, and 4 percent for SRF, said Citi Research.
However, the brokerage added that the actual impact may be lower due to potential offsets from tariffs on other exporters into the US and possible pass-through effects via higher domestic prices in the US market.
At 9.30 am, PI Industries stock was lower by 1.3 percent at Rs 3,124; Navin Fluorine's stock was down 1 percent at Rs 4,045.8; SFR shares were quoting Rs 2,735.9, down by 0.2 percent compared to the previous close on the NSE.
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On the flip side, India could look to shore up its presence in the European chemicals markets, noted analysts at Nuvama Institutional Equities. While this presents opportunities for chemical exporters to Europe, particularly those with a cost edge, the underlying challenges lie beyond pricing. Europe’s chemical industry has been grappling with persistent softness in domestic demand, exacerbated by China’s unchecked overcapacities.
"This has catalysed India’s small-molecule pharmaceutical research industry, which is capitalising on Europe’s shifting dynamics. India’s agrochemical industry too is gaining traction in Europe, supported by a regulatory environment that increasingly favours Indian exports," said Nuvama.
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