Surging Agrochemicals Sector: Navigating Growth Amid Global Challenges

The agrochemicals sector is projected to grow at 7-9% in FY2026, driven by stable domestic demand and a rebound in exports. Despite historical low realisations, operating margins are slowly recovering. Companies focus on managing working capital against Chinese pricing pressures and volatile global conditions.

The agrochemicals sector is set for a 7-9% revenue growth in FY2026, according to a new report released on Friday. This follows a modest 5-6% increase in the current fiscal year, driven by stable domestic demand and a recovery in export volumes, as highlighted by Crisil Ratings.

While the sector grapples with historically low realisations, operating margins are recovering, projected to rise by 100 basis points to 12-13%, still below pre-pandemic levels of 15-16%. As global firms address excessive inventory issues with low-cost supplies, the market shows potential for improvement.

Despite ongoing Chinese pricing pressures, the segment is optimistic with healthy volume growth expected. Domestic revenue benefits from favorable weather and improved agricultural yields. Companies remain cautious, focusing on steady cash flows, limited capex, and controlling debt to maintain solid balance sheets.

(With inputs from agencies.)