Key Points
The Indian agrochemicals sector is expected to face a 3% decline in revenue this year due to falling prices, weak demand, and lower reservoir levels, according to a report by Crisil..
For the first time in a decade, agrochemical makers will see a 3 per cent drop in revenue in 2023-24 due to falling prices globally following a supply deluge from China, muted demand for exports (53 per cent of revenues) owing to destocking by global manufacturers and the impact of lower reservoir levels on rabi sowing, the report said.. Operating margins too may plunge by 400-450 basis points (bps) to a decadal low of 10-11 per cent this fiscal due to lower volumes and realisations, impacting cash accruals for agrochemical players, it stated...
"However, with global manufacturers restocking before the onset of the cropping season in Latin America and the US, which accounts for 55 per cent of exports, a recovery in overseas demand should begin from November," Crisil Ratings Director Poonam Upadhyay said...
"Due to lower profitability, interest coverage and the ratio of total-debt-to-Ebitda are expected to moderate yet will remain comfortable at 6.4 times and 1.5 times, respectively, this fiscal, compared with 10 times and 1 time, respectively, in last fiscal," Crisil Ratings Associate Director Shounak Chakravarty noted...
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