10 Best Chemical Stocks in India in 2023

This guide is all about explaining the best chemical stocks in India. Diversifying an investor's portfolio is the best way to reduce risk and increase the chance of making money.

In the last few years, the Indian chemical system has become well-known worldwide. The chemical industry in India has grown and is now the main focus of many other industries, such as agriculture, pharmaceuticals, food processing, and others.

Here are some of India's best chemical stocks if you want to buy them in 2023.

Overview of the Indian chemical sector

India's chemical industry comprises organized and unorganized individuals who made over 80,000 products worth USD 178 million in 2019. 

1. The Indian chemical segment is expected to grow at a compound annual growth rate (CAGR) of 9.3 percent and reach USD 304 billion.

2. Over the past few years, mass production caused by COVID-19 has brought big changes in the chemical industry.

3. The Indian specialty chemicals market has gained the most by beating China to become the most important.

4. The power crisis, rising operational costs, and major concern about the environment have hurt Chinese companies' production, which has helped chemical manufacturers in India.

India has a strong hold on the global import and export market. It ranks eighth for importing chemical products and fourteenth for exporting them. The country is also the fourth biggest producer of agrochemicals.

In addition to being profitable, firms related to chemicals also have a significant potential for international trade. 

Regarding the chemical sector in India, its contribution to the country's overall gross domestic product is approximately 6–7%. In a variety of different ways, it influences the lives of people.

10 best chemical stocks in India in 2023

Now without wasting any time, let's jump to the list of the top 10 best chemical stocks in India you should invest in 2023. 

Pidilite Industries

Pidilite is one of the top companies in India that makes sealants and adhesives, products for artisans, and building chemicals. Also, Fevicol, which this company makes, has become one of the country's most popular brands of glue. 

Pidilite is the company that owns Fevicol, but it also owns other brands like Fevikwik, Roff, Fevistik, Dr. Dixit, Fevicryl, Araldite, and Hobby Ideas.

Pidilite's adhesives business makes up more than half of its net sales. Also, 70% of the market in the country is made up of adhesives. The best thing about Pidilite is that it has no debt and an impressive return on equity of 24.45%. 

Over the past ten years, its sales have grown by more than 14% profit and 11% CAGR. What else? People say Pidilite is one of the country's best ways to make money.

SRF Limited

SRF is a well-known company that has been around since 1970 and works in the country's specialty chemical sector. It has a wide range of products, such as technical textiles, packaging films, laminated and coated fabrics, etc.

SRF's chemical department brings in a whopping 43% of its revenue. Fluorochemicals and specialty chemicals are the two main areas that the company works in. Also, about 40% of its total revenue comes from the packaging film business. 

Over the last five years, SRF's sales have grown by 13%, and its profits have grown by 23%. Also, its RoE has stayed at 19% over the past five years.

Aarti Industries Limited

Aarti Industries, which makes pharmaceuticals and specialty chemicals in India, is our list's next best chemical stock. The company makes agrochemicals, drugs, polymers, pigments, surfactants, dyes, additives, and other things. 

It also has more than 200 products in the process of making, which gives it access to many different industries in the country. 

Plus, it is involved in 25–30% of agrochemicals, 15-20% of additives and polymers, 25–30% of pharmaceuticals, 15-20% of pigments, dyes, and printing inks, and 10–20% of fuel additives and FMCG products. 

Most importantly, around 83% of its business is in specialty chemicals.

Deepak Nitrite

Deepak Nitrite is a well-known company that makes chemicals. It is based in the Indian state of Gujarat. It makes most of the specialty, fine, organic, and inorganic chemicals on the market.

Also, it makes a wide range of intermediates used in paints, industrial explosives, cosmetics, optical brighteners, polymers, and many other things.

It also has a 70% market share in nitro-toluenes and sodium nitrite, making it the biggest company in the field. Deepak Nitrite has more than 700 clients and sells more than 100 products. 

The company has no debt and has been making money at a CAGR of 64.84% over the last five years. It also has a good return on capital employed (ROCE) of 36.6%, making it one of India's most popular chemical stocks.

Atul Limited

Atul Limited is another company in the chemical industry that is one of the top 10 chemical stocks in the country. At one time, Atul was the largest company in the country that made dyes. 

But it grew and now has businesses in crop protection, polymers, aromatics, pharmaceutical chemicals, and other areas.

Atul Limited has no debt; over the past few years, its profits have grown at a CAGR of 18.3%.

Gujarat Fluorochemicals Limited

The year 2018 saw the starting of Gujarat Fluorochemicals. Initially, the company was known by its previous name, Inox Fluorochemicals Limited. 

This corporation dominates India's market for producing fluoro-polymers, fluoro-specialties, chemicals, and refrigerants.

It is one of the five largest companies in the world, and its wares are distributed across the continents of Europe, Japan, and Asia. The corporation's return on capital employed for fiscal year 21 was 11.4%.

Alkyl Amines Chemicals Ltd

In 1979, Mr. Yogesh Kothari laid the foundation for Alkyl Amines Chemicals Limited. Aliphatic amines are produced by the business, which is recognized as one of the most significant producers in India.

More than one hundred different goods are offered for sale by the company, the vast majority of which were produced in-house.

The company's revenue has increased at a compound annual growth rate (CAGR) of 23% over the past five years, while the company's net profit has increased at a CAGR of 38%. The corporation's return on capital employed for fiscal year 21 was 55%.

Tata Chemicals Limited 

Tata Chemicals Limited produces goods that fall under the inorganic chemistry category. The corporation operates manufacturing facilities on each of the four inhabited continents.

It is the company that produces the most vacuum-evaporated iodized salt in India and the third most soda ash worldwide.

The company's sales have decreased at a compound annual growth rate (CAGR) of 1.73 percent over the past five years, while the company's net profits have decreased at a CAGR of 7.89 percent over the same period. 

Return on capital for the corporation was 4.71 percent as of the end of fiscal year 21.

Solar Industries India Limited

The production of industrial explosives accounts for 73% of Solar Industries India Limited's total income. This is among the company's most important and successful operations.

Additionally, the corporation produces packaged explosives, bulk explosives, and initiating systems. The present value of the corporation, as measured by its market capitalization, is 21,182 crores.

The company's revenue has increased at a compound annual growth rate (CAGR) of 15.33% over the past five years, while the net profit has increased at a CAGR of 15.30%.

SRF Limited

1970 marks the beginning of SRF Limited's operations as a company. The company is in the business of producing both general industrial chemicals and specialized chemicals.

Fluorochemicals, specialty chemicals, packaging films, technical textiles, and coated and laminated fabrics are some of the company's products as part of its product line.

The present value of the corporation, as measured by its market capitalization, is 72,000 crores. For fiscal year 21, it generated a return on capital employed of 18%.

Future of chemical stocks in India

The chemical industry is the most diverse, with more than 80,000 chemical products for sale. It is worth about $100 billion and is one of India's biggest industries. And the chemical industry is expected to grow to $304 billion by 2025. 

It is imperative to note that in 2017, the industry added about $2.6 trillion to our country's GDP, brought in $ 30 billion in taxes, and gave jobs to more than 2 million people across India.

The chemical industry is growing steadily at about 8% per year. There is a high need for chemicals in food processing, pharmaceutical, construction, auto, and other industries.

Even though there is a lot of demand and the chemical industry is growing, it still needs to be better developed than its rivals in other parts of the world. And it can take time for a business to become a world leader in its field.

Is it worth investing in chemical stocks?

The chemical industry's growth and profits are a big part of why investors want to come to the country. It is a booming business that is likely to do well shortly. So, you can invest in chemical stocks to make huge money in India. 

But before you put money into stocks, you should do a lot of research and analysis. Think about your financial goals, how much money you have, how willing you are to take risks, how long you plan to keep your money invested, and so on.

The chemical industry in India has become much more prominent in the international market throughout the past few years. 

The chemical industry in India has grown significantly and is now the primary focus of various other industries. This includes agriculture, the pharmaceutical industry, the food processing industry, and several others. 

These stocks have performed better than those in several different industries.

How to look for chemical stocks to trade?

For a good return, every trader needs to find the right stock. If a trader puts money into a stock going down, he will lose money.

So, if you want to trade in chemical stocks, you must research the stocks properly. Here are some helpful tips for finding a chemical stock:

1. It would help if you first looked at the market. This will let you know if the company is growing steadily.

2. Then, look at your peers and rivals. This will help you figure out how much the stock is worth. You will also find out how well the company is doing compared to its competitors.

3. After that, look at the company's debt-to-equity ratio before buying a share.

4. Check the company's PE ratio to determine its market value.

5. Most importantly, try to pick a company that gives out dividends. This means that the business is stronger.

6. Lastly, check to see if the company has strong leadership. The leader is the most important factor in the growth of the company.

How to buy stocks in the chemical sector?

Here are the steps you need to take to buy Chemical Stocks:

1. You need a Demat account and a trading account if you want to trade. You need to choose a broker and then open an account with that broker.

2. After that, open the broker's trading browser or download their trading app.

3. The next basic step is to set up your account. As you can see, this process is quick and easy.

4. You can start trading once you have set up your account.

5. Lastly, you can set up a "market watch list." You can also set up alerts in the app to determine when the price goes up or down.

As I've already said, setting up your account takes about 5 minutes. After you've done everything, you can start trading. 

Factors to consider before investing in chemical stocks

Even though chemical stocks are thought to grow quickly, there are some things you should know before investing in them.

Tough competition

Most of the time, bulk, commodity, and integrated chemical companies have to deal with tough competition because they make the same products as their competitors. This makes it easy for customers to switch from one business to another. 

The market price is set by the company that makes the product and sells it at the lowest price. Every other company in the market needs to follow that price, so they don't lose customers.

They need a lot of money to run.

The companies that make commodity chemicals need a big factory to make money. Also, they must reach a certain minimum level before it can be useful for their industry.

 So, an investor needs to know that a company in the commodity chemical sector needs a big plant to keep running.

Things you should remember

Don't take hot tips at face value

No matter how trustworthy the source is, you should only blindly follow a stock marketing tip after doing your research first. 

Always choose stocks after doing the right research and analyzing their performance and the companies themselves. Some tips can help you out in a big way, but the wrong ones can put you in danger pretty quickly.

Eliminate loser stocks from the portfolio

There is no way to know that a stock will go up after a big drop. Know that it's very important to be realistic about what can and can't be done on the stock market. 

So, when you realize that a stock in your portfolio isn't doing well, you should accept your mistake and sell it right away to avoid more losses.

Take your time going over your investment budget.

Even though long-term investments are much better than other kinds, you should only invest what you can afford.

Instead, choose a fixed investment amount and spread it among several good stocks. Thus, instead of putting all your money into one stock, spread it out among several good-performing stocks and shares.

Related questions: FAQs

Is it a great idea to invest in the chemical industry?

Many investors have been interested in the chemical industry in the last few years. The fall of Chinese manufacturers, investments in high-end products by Indian manufacturers, and a stable global pricing structure have greatly helped this sector.

How do I buy stocks in a chemical company?

You can buy these stocks through your broker or on the market like the Bombay Stock Exchange (BSE). You can also learn more about a company by looking it up online or, if possible, by talking to someone who works there.

Why are stocks of chemicals important?

Chemical companies are important to the way our society works. Without them, we wouldn't have detergent, soap, toothpaste, and other cleaning products. Chemical companies are also very important for making new medicines and ways to treat diseases. 

Conclusion

As we have discussed at the beginning of this article, the growth of opportunity and market share will likely help the best chemical stocks in India. 

We've given you a list of the best stocks in India's chemical sector and a full description. That's all there is to say. We hope it helps you decide how to invest your money.