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“As a result, exports will continue to be the main contributor.”
An analysis of 50 companies rated by CRISIL Ratings indicated that the Indian agrochemical sector is expected to grow by 15 to 17% this fiscal, according to GlobalFert. According to Poonam Upadhyay, director at CRISIL Ratings, “Export revenue is expected to increase by 18 to 20% this fiscal, with the US dollar appreciating around 9% so far and volume growing as global players continue to reduce risk of its dependence on China”, he comments.
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“In the next fiscal year, exports are likely to grow from 12 to 14% as players keep capex eyeing molecules worth US$4 billion that will go off patent in the next two years. As a result, exports will continue to be the main contributor to the agrochemicals sector, accounting for approximately 53% of total revenue”, he adds.
According to Shounak Chakravarty, Associate Director, CRISIL Ratings, “The credit profiles of CRISIL-rated agrochemical players will remain largely 'stable'. Healthy cash generation will limit dependence on external debt even if capex intensity remains high at Rs. 6,000-6,500 crore in each of the next 2 fiscal years”, it indicates.
“However, the increase in the share of exports mainly to countries in the LATAM region that require longer credit terms will increase their working capital capture. That said, well-maintained balance sheets coupled with higher cash accruals will help debt metrics remain at comfortable levels,” he concludes.
Source: Iara Siqueira | agrolink
