Agrochemical exporters to outperform domestic peers amid muted Q1FY27 earnings: Report
New Delhi, July 10
India's agrochemical sector is likely to report muted earnings in the first quarter of FY27, with exporters expected to outperform companies focused only on the domestic market, according to a report by Anand Rathi.
The report said agrochemical companies are expected to post subdued revenue growth of 3 per cent year-on-year in the first quarter of FY27, while EBITDA is likely to decline 3 per cent year-on-year.
It attributed the weak performance to delayed monsoon rains, which postponed sowing activities and pushed sales into the second quarter of FY27.
The report also said price hikes implemented between March and May 2026 to offset higher raw material costs due to tensions in the Middle East were rolled back amid weak demand.
In addition, an early shift in cropping patterns towards cotton, soybean and pulses also weighed on performance, based on the brokerage's channel checks.According to the report, lower carryover inventories are expected to create room for fresh channel stocking, while favourable minimum support prices (MSPs) and healthy farm economics are likely to support demand for agricultural inputs.
"We believe lower carried-over inventories provide room for fresh channel stocking, while favourable MSPs and healthy farm economics should support input demand," the report said.
It added that rainfall distribution during July and August will be crucial for crop development and for clearing channel inventories.
The brokerage said exporters are likely to benefit from improving demand in Europe, North America and Latin America, along with calibrated price hikes to offset higher raw material and logistics costs.
It also noted that a favourable currency environment, with the US dollar strengthening 12 per cent against the rupee and the euro rising 14 per cent against the rupee year-on-year, is expected to support exporters' earnings growth.
The report further said several sectors are likely to post robust growth in the first quarter of FY27 despite uncertainty arising from the West Asia crisis. However, it added that some sectors are expected to face pressure on gross margins due to higher input costs.
— ANI
Reader Comments
This is classic Indian agriculture story — we always depend on monsoon. Agrochemical companies need to diversify beyond just seasonal demand. But glad to see exporters are leveraging global markets. European demand picking up is good news for our manufacturing base.
Interesting breakdown. The price rollback due to weak demand is worrying — if input costs stay high and farmers aren't buying, margins will get squeezed. But MSP support should help stabilize things. Need to watch West Asia tension impact on raw material costs closely.
Honestly, 3% revenue growth in a delayed monsoon quarter is not bad. But the 3% EBITDA decline shows cost pressures are real. Exporters will benefit from dollar strength, but our domestic companies need better monsoon forecasting and climate-resilient strategies. Time to invest in R&D for drought-tolerant products. 💡
The shift toward cotton, soybean, and pulses is interesting — reflects changing farmer preferences and market signals. But it also adds complexity for agrochemical companies. Lower inventories are a positive sign though; fresh channel stocking should boost Q2. Let's hope the rains cooperate. 🌧️
Good analysis by Anand Rathi. But I'm concerned about the West Asia crisis effect — we saw how Middle East tensions pushed up raw material costs last year. If prices get rolled back again, it's a double whammy for companies. The government should consider buffer stocks for critical agrochemical inputs.
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