BQ Edge: Why White Oak's Manoj Garg Sees A Decade-Long Growth Spurt For Specialty Chemical Makers
The higher growth trajectory of the specialty chemical sector has “just started” and can last to up to a decade, Manoj Garg said.
The higher growth trajectory of India’s specialty chemical sector has “just started” and can last to up to a decade, according to Manoj Garg.
The director of investments at White Oak Capital Management cited a survey by Japanese manufacturers that found an “easternisation” of global chemical manufacturing as companies look for a “China plus one” strategy. And he attributed India’s strength in chemistry for a preference among global firms to tie up with homegrown makers of chemicals.
Indian firms’ cost advantage is a “sustainable opportunity” and the government’s performance-linked incentive scheme can become a “meaningful catalyst”, Garg told BloombergQuint’s Niraj Shah during the BQ Edge event.
Chemical firms, according to him, derive materially higher value from return on invested capital, have a long runway to grow aided by their strong balance sheets compared to the benchmark, and will continue to command premium valuations.
Garg expects companies like PI Industries Ltd., Aarti Industries Ltd., SRF Ltd. and Navin Fluorine International Ltd. to expand rapidly in the next few years.
He said companies focusing on emerging chemistries and applications, employing correct human resource practices and establishing a strong global presence will be winners.