Planned CapEx of INR 16,100+ crores from Indian Specialty Chemicals over the next 3 years: Windmill Capital


The sector is expected to grow 19% in FY24 and 17.6% in FY25

BANGALORE, India, March 23, 2023 /PRNewswire/ — In a recent study on Specialty Chemicals by Windmill Capital, a wholly- owned subsidiary of smallcase, it is expected that Indian Specialty Chemicals companies have CapEx plans in excess of Rs. 16,100 crores over the next 3 years. Asian Paints, Tatva Chintan Pharma, and PI Industries are some companies within the Specialty Chemical sector witnessing margin pressure on the bottom line. The segment is expected to grow 19% in FY24 and 17.6% in FY25. The Specialty Chemicals smallcase has delivered 13.8% compounded returns since inception in July 2016 vs 12.9% compounded returns delivered by Equity Mid and Smallcap stocks during the same period.

Naveen KR, smallcase manager and Senior Director, Windmill Capital, said, “Growth in the Specialty Chemical segment is driven by strong domestic demand and increased demand from overseas markets, which has been reinforced by major global economies adopting the China +1 policy. Many companies are seeing high growth, but due to margin pressure results have been poor and as a consequence stocks are taking a beating. Asian Paints, PI Industries, Aarti Industries, Gujarat Fluorochemicals, Vinati Organics, Anupam Rasayan, Clean Science and Technology, have highlighted strong CapEx plans in this sector as they see demand for the products that they offer.”

CapEx plans of Rs. 16,100+ crores over the next 3 years from different Indian Specialty Chemicals Companies. Some of them include:

  • Asian Paints has planned a CapEx of Rs. 8750 crores over the next three years, out of which CapEx of Rs. 6750 crores was announced in Q2FY23 for Brownfield and Greenfield expansions for capacity enhancement, backward integration, and acquisitions. Rs. 3400 crores will be used for capacity enhancement, Rs. 2,550 crores for backward integration, and Rs. 800 crores for the inorganic growth opportunities. In Q3FY23 the company announced that Rs. 2000 crores will be spent to set up a new water-based manufacturing facility with a capacity of 4 lakh kilolitres per annum.
  • Aarti Industries is planning to spend around Rs. 1000-1200 crores during FY23 towards capacity expansion. Rs. 840 crores has been expended so far during 9MFY23. Ethylation capacity at Dahej SEZ is being expanded with an investment of around Rs. 200 crores and is expected to come on stream in H1 FY25. The company is also planning to further debottleneck its Nitro Toluene Capacities. The collective CapEx for FY24 and FY25 is expected to be around Rs. 3000 crores. The company does not intend to slow down its CapEx intensity, given long-term visibility.
  • Gujarat Fluorochemicals is  debottlenecking its PTFE capacity and expanding its fluoropolymer manufacturing capacity. The company is expected to incur a CapEx of Rs. 1250 crores in FY23 as well as FY24.
  • Vinati Organics is increasing the manufacturing capacity of ATBS from 40,000 MT to 60,000 MT on the back of strong demand for the product. It will invest Rs. 300 crores for the expansion, to be funded by internal accruals, and expects it to get commissioned by December 2023. Another Rs. 200 crores is expected to be spent during FY25.
  • Anupam Rasayan India has invested Rs. 100 Crores till 9MFY23 out of the total planned CapEx of Rs.170180 crores in FY23. Further CapEx of Rs. 300 crores and Rs. 250 crores will be incurred during FY24 and FY25 respectively.
  • Clean Science and Technology has expended Rs. 165 crores during 9MFY23 towards capacity expansion. Another Rs. 150 crores will be spent during FY24. The Greenfield project for HALS is on track for commissioning during 4QFY24.
  • PI Industries incurred a total CapEx of Rs. 260 crores 9MFY23. The management has guided for CapEx of Rs. 500 – 800 crores in FY23/FY24 to meet its order book.

Margin pressures weighing on the bottom line – Asian Pants| Tatva Chintan Pharma| PI Industries Ltd

The pandemic and subsequent macro challenges like high inflation and supply chain disruptions have had varying impacts on different segments of the Specialty Chemicals sector in the country. While domestic-oriented segments like construction chemicals, which includes Asian Paints, have seen a recovery in demand, their margins have been impacted due to a spike in raw material prices. Entities like Tatva Chintan Pharma, which have significant external exposure and cater to end-user industries like automobiles and textiles, have been significantly impacted due to lower sales and margin pressure. Companies like PI Industries, that deal in agrochemicals, API, etc, have not been impacted and continue to see positive top-line and bottom-line growth. While challenges will continue to persist in the near term, long-term prospects for the Specialty chemical industry in India continue to be bright.

Comparative Price Performance of Refinitiv India Specialty Chemicals Index against Nifty

During the past year the Refinitiv India Specialty Chemicals index, an index constructed by data provider Refinitv Eikon and that track the Indian Specialty Chemicals sector, has dropped by 14.3% compared to the flattish performance of the Nifty 100 and Nifty 500. However, on a 3-year and 5-year basis, the Specialty Chemicals Index has given handsome returns and comfortably beaten the performance of large-cap and multi-cap indices. To understand what is ailing the Specialty Chemicals index the Refinitiv India Specialty Chemicals Index was studied.

Median expected growth rate and expected EBITDA margin of Specialty Chemical companies that Windmill Capital tracks

Windmill Capital highlights that Specialty Chemicals sector’s expected revenue growth stood at 18.4% in FY23. It is expected to grow 19% in FY24 and 17.6% in FY25. EBITDA Margin for FY23 is expected to decline due to high inflation of 17.5%. As inflation eases, EBITDA margins are expected to improve to 21.5% in FY24 and are expected to remain steady at 21.3% in FY25. Estimated EPS growth for FY23 stood at 19.3%, which is expected to improve to 30.7% in FY24 and grow by 22.9% in FY25.

Expectations on the earnings of Specialty Chemicals in Q4 2023 & FY23

Brighter days seem to be ahead for Specialty Chemical companies. Due to normal monsoon and high prices at mandi’s, green shoots of rural demand have been appearing. Sequential cooling of inflation has eased pressure on consumer wallets, aiding volume recovery for end user industries as well as softening impact of input cost for specialty chemical companies. China opening up and improvement in aspects of the global supply chain are other positives.

Revenue of Specialty Chemical companies is expected to grow by 19%/17.6% in FY24 / FY25. Significant margin improvements are also forecasted and EBITDA margin is expected to improve to 21.5% / 21.3% in FY24/FY25.

FY23 Estimate

FY24 Estimate

FY25 Estimate


18.4 %

19.0 %

17.6 %


27.6 %

30.4 %

22.4 %

EBITDA Margin %

17.5 %

21.5 %

21.3 %


19.3 %

30.7 %

22.9 %


About smallcase: smallcase is a financial technology company building a platform for direct indexing, model portfolios of stocks & ETFs known as smallcases. In the last six years, smallcase has developed an ecosystem of 350+ businesses in the capital markets space. The ecosystem includes some of India’s prominent financial institutions and brands that leverage the smallcases platform & technology. Over 6.5 million investors use smallcase products and apps every month. Headquartered in Bengaluru, smallcase has more than 300 employees across engineering, product, business, and growth functions. Download the smallcase app here:

About Windmill Capital: Windmill Capital Private Limited (hereinafter referred to as “the Company”) is a SEBI registered Research Analyst having registration number – INH200007645 under SEBI (Research Analyst) Regulations, 2014 and is a wholly owned subsidiary of smallcase Technologies Private Limited. Visit for more information.

Disclaimer: This is not investment advice or buy or sell recommendation. Readers should do their own research and analysis or consult an investment adviser before taking positions in any stocks or sectors or making any financial allocations. Equity markets can cause complete loss of capital. Please read full disclaimers at



Cision View original content to download multimedia:

Disclaimer: The above press release comes to you under an arrangement with PR Newswire. takes no editorial responsibility for the same.