Global Demand Boosts Agrochemical Industry Amidst Monsoon Challenges

The agrochemical industry's revenue is projected to grow 6-7% this fiscal due to revived global demand and inventory normalization, despite domestic challenges from an extended monsoon. Export revenue is expected to rise 8-9%, while operating margins remain stable. Future growth hinges on sustained export momentum.

The agrochemical industry is set to experience a revenue growth of 6-7% this financial year, buoyed by a global demand resurgence and inventory normalization, as outlined in a report by Crisil Ratings. However, domestic uptake is slowing due to an extended monsoon season that has hindered crop production and delayed field preparations.

Crisil Ratings further notes an anticipated export revenue increase of 8-9% this fiscal, spurred by improved global agricultural sentiment. In contrast, the domestic market faces challenges, including crop damage and product returns linked to excessive rainfall. The sector's growth outlook remains more volume-driven than price-led this year.

The report highlights steady realizations and raw material prices, ensuring operating margins remain stable at 12.5-13%. However, climactic changes, regulatory shifts, and currency fluctuations pose risks. Capital expenditure in import substitution and new registrations will continue, fostering disciplined financial management and keeping borrowing needs minimal.

(With inputs from agencies.)