"With the impact on the specialty chemical industry mitigated by above-mentioned factors, the credit outlook for the sector remains stable, further aided by the robust balance sheets of the companies in this segment with moderate gearing and healthy coverage indicators," Sai Krishna, assistant vice-president and associate head (corporate ratings) at ICRA, said.
He added that additionally, companies with high product and geographic diversification are better placed to withstand any pressure on demand from specific end-user segments.
ICRA also stated that the 'China+1' strategy, being adopted by global players to diversify their supply chain due to the growing trade conflicts with China in recent years, could translate to multi-year growth potential for domestic companies.
Further, the disruption in global supply chains caused by the COVID-19 pandemic is also forcing multinational companies (MNCs) to diversify and reduce dependence on China.
K Ravichandran, senior vice-president and group head (corporate ratings) at ICRA, said the domestic specialty chemical sector has an established track record in exports.
He added, "With...availability of skilled manpower, growing cost competitiveness and expected favourable (government) initiatives... the domestic specialty chemical sector is well placed to benefit from the supply chain diversification strategy of global MNCs and can witness multi-year growth in the medium-to-long term," said.
However, in order to leverage its potential, some policy support from the government to reduce dependence on imported intermediates and towards better environmental policy and compliance will be needed, he added.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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