Live
- ‘Jitender Reddy’ review: A courageous biopic
- ‘Jathara’ movie review: A rural revenge saga wrapped in tradition
- PM Modi’s ‘Bharat 6G Vision’ poised to get another booster
- Social media doing harm to youngsters, calling time on it: Australian PM Albanese
- Gut microbiome changes may signal onset of rheumatoid arthritis
- Caste census, a historic benchmark in country: MLA Prakash
- Siddharth and Ashika Ranganath’s ‘Miss You’ Set for November 29 Release
- Cops return kidnapped woman within 24 hours
- IT Min lays foundation stone for Co-operative Central Bank building
- Abhishek Bachchan and Aishwarya Rai Divorce Rumors: Family Denies Affair with Nimrat Kaur
Just In
PL Sector Report - Agro Chemicals - Sector Update – Global agrochemicals - Weak quarter; bleak near term outlook
Agro Chemicals - Himanshu Binani - Research Analyst, Prabhudas Lilladher Pvt Ltd
Agro Chemicals - Himanshu Binani - Research Analyst, Prabhudas Lilladher Pvt Ltd
Sector Update – Global agrochemicals - Weak quarter; bleak near term outlook
Global agrochemical companies reported subdued results in 1QCY23 largely led by muted demand across key regions of LATAM and NAFTA. Weak demand environment coupled with high channel inventory in key markets further impacted product placements and exerted pressure on realizations. Reading through global companies commentaries and outlook for subsequent quarters (also CY23) 1HCY23 is expected to be muted impacted by a) inventory pile-up in key regions, b) low demand and c) pricing pressure. While, recovery in demand environment likely to come from 2HCY23. For domestic companies with exports exposure (barring PI Industries), near term commentary and outlook remained same citing high channel inventory and pricing pressure across key regions. Having said that, we continue to maintain our cautious stance on the sector citing slower demand and pricing pressure in both domestic and export markets. PI Industries remains our Top-pick in the sector.
2QCY23 to remain weak; recovery expected from 2HCY23: Commentaries from global agrochemicals opined for weak sentiments in the near term exerting pressure on performance. Industry expects de-stocking at the end of 1HCY23 and hence volume recovery expected only in 2HCY23. Near term, slower demand coupled with RM price correction is likely to weigh on realizations and margins for the industry.
Global crop prices under pressure led by higher production in key regions: In 1QCY23, commodity prices continued to decline (Wheat/Soybean/Corn/ Cotton down 46%/24%/35%/17% YoY as on May’23) owing to slowing down in global economy and better than expected production in key regions. Further, higher channel inventory coupled with deflationary RM cost scenario led by a) slower demand environment amid challenging weather conditions in key regions; b) opening up of China post Covid-19 restrictions resulting into huge demand-supply mismatch in global markets) causing customers to adopt wait and watch approach on their purchases.
Common statement coming out from commentary of global companies: After going through the results and commentaries of global agrochemical companies common statement coming out are a) Generic players have been more impacted than that of the specialty/ patented players; b) performance and prices of specialty molecules have been steady till 1Q’23; which in turn have supported the performance to some extent; c) Innovation turnover index (ITI index) have been decent for all companies; which in turn have partially mitigated margin contraction; d) higher channel inventory across key regions of LATAM, NAFTA; falling RM cost scenario; slower demand environment is becoming prominent at the global level (likely to impact more the generic players) likely to keep near term outlook bleak.
© 2024 Hyderabad Media House Limited/The Hans India. All rights reserved. Powered by hocalwire.com