Indian Chemicals Are Recovering — But Returns on Capital Need 2–3 More Years, Says Equirus
Every buyer who negotiated hard during 2023–25 felt the chemical downturn from the other side of the table. A new Equirus Capital report, "Indian Chemicals: The Reset", says the cycle has turned — but the recovery will take time to reach balance sheets.
Key findings:
• Median revenue across 72 listed chemical companies grew 22% year on year, and 83% of them reported growth. • Aggregate sector margin improved to 17.4%, from 15.5% in the previous quarter. • Established specialty plants are running at 60–75% utilisation; recently commissioned facilities at only 20–30%. • The 2023–25 slowdown is described as cyclical and capacity-driven, not structural. • India's specialty chemicals market is estimated at $36 billion (2025) and projected to reach $61 billion by 2030 — about 11% a year. • Agrochemicals remain the weak spot, with revenue trends still soft.
Part of the margin gain is linked to crude oil and freight costs, so sustained volume growth is what will matter. Returns on capital may take another two to three years to improve as the large capacity built in the last investment cycle fills up.
What it means for buyers and sellers
With new plants running well below capacity, many producers have volume to place — a window for buyers to lock in term contracts and qualify additional domestic sources, especially in specialty intermediates. For producers, finding buyers for that idle capacity — and for surplus and near-expiry stock — matters more than usual in this phase of the cycle.
Photo (representative): Mumbai skyline. iMahesh, CC BY-SA 4.0, via Wikimedia Commons.