In the latest monthly report IDBI Capital has offered a cautiously optimistic outlook on India’s chemical sector amid volatile crude oil prices and a largely deflationary pricing environment for most industrial chemicals. Amidst this backdrop, the brokerage has maintained a bullish stance on select value-added chemical companies and projected strong long-term returns, naming Neogen Chemicals and Clean Science and Technology among its top picks.
IDBI Capital Chemical Industry Report: Prices Under Pressure, Acetyl Compounds Buck the Trend
In April 2025, most commodity and specialty chemicals witnessed month-on-month (MoM) price declines, continuing a downward trend that began in late 2024. A significant driver behind this price erosion has been a sharp ~14% MoM decline in crude oil prices, triggered by persistent geopolitical tensions and erratic global demand patterns.
However, amid the broad-based softness, acetyl compounds such as acetic acid, acetone, ethyl acetate, and vinyl acetate monomer saw a marginal price uptick. Specifically, acetic acid rose 2% MoM, helping lift prices of downstream derivatives. Despite this, prices of these derivatives remain significantly below their COVID-era peaks — with acetic acid down 64% from its 2021 high.
Key losers in terms of price correction included:
- Methanol: down 14% MoM
- Monoethylene Glycol (MEG): down 8%
- Toluene: down 5%
- Phthalic Anhydride: down 7%
- Acetonitrile: down 2%
Companies such as SRF, Aarti Industries, and Vinati Organics, which are consumers of these inputs, are expected to benefit from this deflationary environment.
Stock Picks Amidst Pricing Volatility
Despite short-term pricing headwinds, IDBI Capital’s strategy clearly favors firms transitioning from commodity players to high-value specialty chemicals producers — especially those with capabilities in complex chemistries or first-mover advantages in emerging verticals.
Neogen Chemicals: A Multibagger in the Making?
Rating: BUY
Target Price: INR 2,871
Current Price: INR 1,493
Upside Potential: +92.3%
Neogen Chemicals has emerged as a standout in the bromine derivatives and lithium-based battery chemical space. With its expertise in bromination and expansion into advanced battery chemicals, the company is strategically positioned to capitalize on India’s electric mobility boom and global clean energy transition.
The brokerage emphasizes Neogen’s first-mover advantage, integrated production capabilities, and future-ready product portfolio as key differentiators. Despite premium valuations (FY26E P/E of 69.5x), IDBI Capital believes its long growth runway justifies the optimism.
Neogen Chemicals IPO was launched on 24 April 2019, the IPO was a mix of fresh (INR 70 crore) and OFS (INR 62.35 crore). Neogen IPO was subscribed 40.97 times and listed with 22.58% profit.
Clean Science and Technology: Strong Upside in Green Chemistry
Rating: HOLD
Target Price: INR 1,500
Current Price: INR 1,178
Upside Potential: +27.3%
Clean Science continues to leverage its innovation-led model in green and sustainable chemistry. While valuations remain elevated, the company’s focus on process innovation, cost leadership, and cleanroom manufacturing capabilities keeps it in good stead.
With a FY26E P/E of 36.8x, the stock is not cheap by conventional metrics. However, the company’s superior return ratios, low debt, and continued investments in R&D make it a promising compounder in the specialty chemicals segment.
Clean Sciences launched its IPO on 7 July 2021, the IPO was a total OFS worth INR 1,546.6 crore. The IPO got a massive subscription of 93.4X and listed with 76.14% returns.
Industry Outlook: From Commodity to Value-Added Chemistry
The report also outlines a broader structural shift within India’s chemical sector. As domestic players increasingly move up the value chain — focusing on complex chemistries, regulated markets, and capex-led growth — IDBI Capital expects these firms to outperform traditional bulk chemical manufacturers in the long term.
Notably, Ami Organics was highlighted as a company with a promising future, backed by its expertise in advanced pharma intermediates and upcoming capacity expansions at its Ankleshwar unit. Also, ace investor Ashish Kacholia holds 7,04,974 share (1.7% stake in the company) worths INR 85.1 crore.
“Companies delivering value-added products and climbing up the complexity curve will fare better compared to pure-play commodity producers,” the report notes.
Valuation Snapshot: Selective Bets in a Volatile Market
| Company | Recommendation | CMP (INR) | Target Price (INR) | Upside (%) | FY25E P/E (x) | FY26E P/E (x) |
|---|---|---|---|---|---|---|
| Neogen Chemicals | BUY | 1,493 | 2,871 | +92.3 | 84.4 | 69.5 |
| Clean Science | HOLD | 1,178 | 1,500 | +27.3 | 47.1 | 36.8 |
| Ami Organics | HOLD | 1,127 | 1,169 | +3.7 | 35.0 | 24.6 |
| SRF | HOLD | 3,007 | 2,701 | -10.2 | 73.0 | 57.0 |
| Navin Fluorine | HOLD | 4,567 | 4,001 | -12.4 | 79.3 | 60.4 |
Conclusion
While commodity chemical prices remain subdued due to weak crude and global uncertainties, IDBI Capital’s bullish call on select specialty chemical players underscores a fundamental industry shift. The focus is now on process excellence, sustainability, and value addition rather than mere price cycles.
Neogen Chemicals, with its near-doubling upside potential, and Clean Science, with its sustainable product portfolio, reflect the new face of India’s chemical sector — agile, innovation-driven, and future-ready.
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