Agrochemicals Sector Check - Weak Quarter; Bleak Near-Term Outlook: Prabhudas Lilladher

Prabhudas Lilladher Report

Global agrochemical companies reported subdued results in Q1 CY23 largely led by muted demand across key regions of Latin America and North American Free Trade Agreement.

Weak demand environment coupled with high channel inventory in key markets further impacted product placements and exerted pressure on realizations. Reading through global companies commentaries and outlook for subsequent quarters (also CY23) H1 CY23 is expected to be muted impacted by-

1. inventory pile-up in key regions,

2. low demand and

3. pricing pressure.

While, recovery in demand environment likely to come from H2 CY23. For domestic companies with exports exposure (barring PI Industries Ltd.), near term commentary and outlook remained same citing high channel inventory and pricing pressure across key regions.

Having said that, we continue to maintain our cautious stance on the sector citing slower demand and pricing pressure in both domestic and export markets.

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