New Delhi: India’s chemicals industry has become the global leader in value creation, achieving a five-year total shareholder return (TSR) of 28 per cent from 2020 to 2024, significantly higher than the global average of 7 per cent, a report said on Tuesday.
India’s chemicals outperformance was driven by resilient domestic demand, targeted policy support, and improved investor sentiment that lifted valuation multiples. according to the report from Boston Consulting Group.Agrochemical exports and its domestic demand, along with speciality segments like pharmaceutical ingredients, personal care, and engineered materials, significantly contributed to the outperformance. The returns from fertilisers were primarily driven by domestic demand, the report noted.
Indian firms in focused specialties achieved a return of 33 per cent TSR, while fertilisers recorded 32 per cent returns, both significantly exceeding global averages. TSR represents the percentage increase in a company’s value -- stock price plus dividends -- over a given period. Regionally, emerging market chemical companies were the strongest performers overall, delivering average five-year TSR of 12 per cent.
The outperformance was driven by revenue and profit growth as well as higher P/E multiples, supported by strong domestic demand, said Amit Gandhi, Managing Director & Senior Partner, BCG India.The next phase of advancement depends on how Indian companies choose to scale over the next five years, whether by strengthening existing value chains or by venturing into new ones, he added.
BCG reported that companies focussing on commercial excellence, disciplined capital allocation, and portfolio quality are positioned to maintain this momentum.Chemical products were among the top five industries that contributed to GVA growth of the country in FY 24, along with basic metals, motor vehicles, chemical products, food products, and pharmaceuticals.Over 5,500 farmer collectives are licensed to distribute fertilisers. More than 400 FPOs operate dealerships for agrochemical distribution, ensuring that dealer discounts are passed on to member farmers.
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