Vinati Organics, Aarti, PI Industries: Why chemical stocks are falling today, target prices

Specialty chemical stocks such as Clean Science and Technology Ltd, Vinati Organics Ltd, Aarti Industries Ltd and PI Industries Ltd fell up to 4 per cent in Friday's trade amid demand and margin concerns following the US tariffs.

PI Industries (43 per cent of revenues), Vinati Organics (20 per cent), Clean Science (17 per cent), Navin Fluorine (14 per cent) and Aarti Industries (11 per cent) derive considerable revenues from the US geography. 

At 11 am, Vinati Organics was trading 2.56 per cent lower at Rs 1,514.65. PI Industries declined 3 per cent to Rs 3,350. Navin Fluorine dropped 1.81 per cent while Clean Science slipped 1.74 per cent. Aarti Industries tanked 4.15 per cent to Rs 381.60. 

The imposition of large reciprocal tariffs by the US is seen as a negative for the chemical industry overall. This may result in slowdown in demand from key end-use industries such as automotive, construction and consumer durables. Besides, the development could raise price  competition in the non-US markets and lead to renegotiations with customers on margins. 

Retaliatory tariffs are an added risk, said Kotak Institutional Equities.

 Kotak said given the overcapacity already created in  China, it sees risks of intensified price competition in markets outside of the US. Retaliatory tariffs by other countries— which should soon follow — would accentuate these headwinds further, it said. 

Here are target prices for the specialty chemical stocks:

 

For PI, a major share of exports comes from pyroxasulfone, where Kotak expects some combination of price increases for US farmers and  pressure on margins down the supply chain. 

For Vinati Organics, Kotak expects a combination of pressure on ATBS demand and price renegotiation by customers, while potentially  creating opportunities for competition. 

"For Clean Science, existing US sales are  primarily from the MEHQ business, but HALS is a key growth driver with  significant sales expected in the US. Navin’s US sales primarily comprise HFO sales to Honeywell and certain agrochemical sales to Corteva," it said.