These are interesting times for Indian chemical companies
They are interesting occasions for Indian chemical companies. Around the one hands, MNCs are reimagining their supply chains on the rear of the outbreak of coronavirus, while alternatively, India's been promoting domestic manufacturing.
The Indian chemical industry includes a 3.4% share of the market within the global chemical industry and it is likely to grow in a compounded annualised rate of growth of 9.2% by 2025. Based on a McKinsey report, India runs a deficit of USD 15 billion on chemicals trade. Quite simply, the Indian chemical industry will probably see three major growth trends happening within the foreseeable future - growth from the domestic market because of favourable census, import substitution and export augmentation.
However the chemical market is diverse anyway. Some chemical companies engage only within the manufacturing and buying and selling of bulk chemicals, that are bought and offered as goods. While some address specific purposes/functions and therefore are thus known as niche chemicals. Niche chemicals has turned into a buzzword nowadays, however, it's imperative to not label the whole space as attractive.
Appeal of a niche chemical company mainly depends upon 4 factors
Growth trends in the market it's offering to
Degree of technical expertise needed in manufacturing
Research abilities of the organization
Competition in the market
Therefore, with respect to the chemistry and also the product basket, a business will quote valuations. Pointless to state, niche chemical companies would command premium valuations vis-à-vis bulk chemical companies given that they be a partner within the development of their customers. That stated, not every niche companies get similar valuations.