5 Best Chemical Stocks with High FII Holdings – Watchlist Gems?

Best Chemical Stocks with High FII Holdings: In the complex structure of global industries, when we see textiles of multiple colors, and skyscrapers built around the world we have to sit & ask ourselves, What are the basic components that make all of this possible? What are the raw materials that might seem simple but can construct an intricately beautiful world?

The answer is Chemistry. Chemistry becomes the foundation, upon which all these other industries stand. Any innovation in this industry really goes a long way into developing multiple other industries along the way.

In this article, we will take a look at the 5 best Chemical Stocks with High FII Holdings and analyze their business, financials and more..

Best Chemical Stocks with High FII Holdings

So, today we will be reading about best chemical stocks with high FII Holdings. These chemical stocks are mostly market leaders domestically as well as globally. Some have a great rich history, which we will explore and then take a brief look at their revenues, before concluding the article. 

GHCL

GHCL Limited (or Gujarat Heavy Chemicals Ltd) was incorporated in 1983. It is one of the largest manufacturers of Soda Ash in the Country. Soda ash is a major raw material that is used in detergents, glass, ceramics, and in the production of Sodium Bicarbonate (Baking Soda).

GHCL has a Soda Ash manufacturing plant at Sutrapada in Gujarat with an installed production capacity of 12 Lakh Metric Tonne Per Annum (MTPA). Its Soda Ash is available in two grades – light and dense grade and is marketed in India under the brand name ‘LION’.

The Company also has lignite mines in the Bhavnagar district of Gujarat, supplying raw materials for the production of Soda ash. The Company also has a production capacity of around 0.12 MTPA of Sodium Bicarbonate (Baking Soda). This raw material finds application in bakery, pharma, fire extinguisher manufacturing, cleaning agents, etc.

GHCL is the chemical stock with the highest FII Holding coming around 26.04% as of June 30, 2023. The Company’s biggest foreign investors are Ares Diversified and Eos Multi-Strategy Fund, which hold about 4.90% and 3.08% respectively.

GHCL reported a spectacular revenue growth of 50%, growing from Rs. 3062 Cr in FY22 to Rs. 4584 Cr in FY23. During the same time, Net Profits grew from Rs. 650 Cr in FY22 to Rs. 1141 Cr in FY23, growing by over 76% in a year.

SRF 

SRF (Shri Ram Fibres) was incorporated in 1970 by Dr. Bharat Ram. It was predominantly a technical textiles company.  The business later ventured into Engineering Plastics production for the Automotive sector in 1979 and the Coated fabrics Business in 1986. It was renamed as SRF in 1990.

The Business operates in Fluorochemicals, Specialty Chemicals, Packaging, Technical Textiles, Coated Fabrics, and Laminated Fabrics Business. It caters to multiple industries such as Automotive, Pharmaceuticals, Agrochemicals, Mining, Air Conditioning, and much more.

The Chemicals Technology Group (CTG) at SRF is actively engaged in the development of new products and technologies for Fluorochemicals and Specialty Chemicals businesses. SRF has 2 Research & Development facilities employing over 400 people, located in Bhiwadi & Gurugram. As of FY23, It has over 350+ patents filed under its name.

The Company has a high FII holding coming around 20.03% as of June 30, 2023. Amansa Holding is the biggest foreign investor holding 3.54% of the Company.

The Company has seen its Revenue increase by 19%, from Rs. 12,549 Cr in FY22 to Rs. 14,945 Cr in FY23. However, Profit growth was slow compared to revenue at just 14%, from Rs. 1889 Cr in FY22 to Rs. 2162 Cr in FY23.

Navin Fluorine (NFIL)

Navin Fluorine International Ltd (NFIL) was established in 1967 as an Integrated Fluorochemical Complex to produce refrigerant gases and a range of organic & inorganic fluorides in Surat, Gujarat. It also has an R&D center named Navin Research Innovation Center (NRIC) in Surat, Gujarat.

Today, NFIL is one of the largest manufacturers of specialty fluorochemicals. Its four main business segments are Refrigeration Gases, Inorganic Fluorides, Speciality Fluorides, and Contract Development and Manufacturing Organisation (CDMO). Navin has the capability to scale up from research to pilot to manufacturing, all in-house.

Navin’s subsidiary in the UK, Manchester Organics Ltd participates in the early discovery phase with the innovator customers. Its contract research services develop process chemistries, novel analogs, and derivatives around the customers’ target molecules to support research and discovery activities. 

The Company also has a plant set up in the Dewas region of Madhya Pradesh. It supports life science, crop protection, and other specialty chemical sectors right through product development life cycles. 

NFIL has emerged as a preferred partner of choice for a variety of fluorochemicals globally. Its clientele includes crop protection, petrochemical, top-tier life sciences, and specialty chemical companies. More than 40% of their products are exported to North America, Europe, and Asia Pacific regions.

NFIL has an FII shareholding of 19.20% as of September 30, 2023. Small Cap World Fund Inc. is one of its largest investors owning 2.79% of the Company. 

Navin’s FY23 revenue was reported at Rs. 2113 Cr which increased by 42% from Rs. 1492 Cr in FY22. At the same time, Its Net Profit grew from Rs. 263 Cr in FY22 to Rs. 375 Cr, growing by 43%.

Tata Chemicals

Tata Chemicals has a very rich history that dates back to the year 1927 when Kapil Ram Vakil set up the Okhamandal Salt Works in the Kutch region of Gujarat. Kapil Ram Vakil was a chemical Engineer educated in England. A decade after incorporation, he was approached by the Tatas for the expansion of his plant.

This led to the birth of Tata Chemicals in 1939, with the acquisition of Okha Salt Works. This very Company grew from its humble beginnings to become a global chemical player, becoming the 3^rd Largest Soda Ash manufacturer in Asia and 6^th largest Sodium Bicarbonate manufacturer in the world. 

The Company now has two specific business divisions, Basic Chemistry Products and Specialty Products. The Basic Chemistry division manufactures Alkali Products, Halogen Products, and other salt products.

While the Specialty products division deals with AgroSciences, Nutritional Sciences, and Material Sciences. The Material sciences division is one of the most interesting space as it deals with the manufacturing of Lithium-ion cells. These cells are collectively installed to form an electric vehicle’s battery.

The Company has an FII holding of 14.47% as of September 30, 2023. Acacia Institutional Partners & Acacia Conservation Fund hold substantial interests in the Company. 

Tata Chemicals grew its revenue by over 32%, from Rs, 12,878 Cr in FY22 to Rs. 17,007 Cr in FY23. At the same time, Net Profits saw even better growth at 73%, growing from Rs. 1405 Cr in FY22 to Rs. 2434 in FY23.

Aarti Industries Ltd (AIL)

Aarti Industries (AIL) was set up back in 1984 as Aarti Organics Pvt Ltd. It commenced operations with a 1,200 Tonne Per annum unit for Nitro Chlorobenzene In Sarigra, Gujarat. Today, it is a leading Manufacturer of Specialty chemicals and pharmaceutical products.

AIL has 16 manufacturing facilities in the country and 2 R&D facilities. The Company has over 1100+ customers in over 60 countries across the globe. It is the 3^rd largest in Chlorination and Nitration and top 2^nd in Hydrogenation.

 The Company earns most of its revenue from the Agrochemical sector (30%), followed by Polymer and additives (26%). Pharmaceutical segments bring another 18% to the Company. 

In the export market, North America is its biggest customer (13%), followed by Europe (11%). Japan and China account for 6% and 3% of sales respectively.

Major Companies like BASF, Sabic (Saudi), Indian Oil, Bayer, and UPL are a few of AIL’s key customers. AIL’s revenue from exports has increased from Rs. 1977 Cr in FY19 to Rs. 3573 Cr in FY23, growing at the rate of 19% CAGR in the past 5 years.

10.57% of the Company is held by Foreign Institutional Investors. Some of the notable investors are Baron Emerging Markets Fund and Morgan Stanley Investments Fund which own 1.02% and 1.24% stake in the Company respectively.

AIL reported a very slow revenue growth of just 9%, growing from Rs. 6086 Cr in FY22 to Rs. 6619 Cr in FY23. While revenue still managed a positive growth, Net Profits had a heavy fall of 54%, from Rs. 1185 Cr. To Rs. 545 Cr in FY23. A significant rise in raw material prices is the result of low profitability.   

List of Best Chemical Stocks with High FII Holdings

The list below puts together 10 Chemical stocks with the Highest FII Holding 

Conclusion

As we conclude our article on 5 Best Chemical Stocks with High FII Holdings, The Indian chemical industry plays a pivotal role in the economy of the country, accounting for ~7% of GDP. It is projected to grow at a CAGR of 11-12% during 2021-27 and 7-10% thereafter during 2027-40.

This Industry is currently suffering due to a rise in raw material prices that are eating up margins (SRF & AIL). However, very few continue to prosper such as GHCL. Some on the other hand are very forward-looking, such as Tata Chemicals.

One thing that is quite similar among all of them is their CAPEX plans. The entire industry is in an expansion phase and all the Companies on our list are focusing on expanding their current capabilities, despite low margins.

So which one is your favorite’s stock from our list? Is there any stock that you want us to fundamentally Analyse? Do let us know in the comments below.  

Written by Nasir Hussain

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