5 Chemical Stocks Poised to Benefit from Trump's Tariffs on China

In recent years, global trade tensions, particularly between the United States and China, have reshaped the landscape for many industries.

Among the most affected sectors are chemicals, with tariffs becoming a pivotal element in shaping market dynamics.

US President Trump's tariff policies, aimed at curbing China's trade practices, have disrupted supply chains and altered pricing strategies for chemical companies.

However, these challenges have not only posed risks but have also opened up new opportunities for certain chemical firms.

With the shifting trade winds, some Indian stocks are well-positioned to capitalise on the fallout from these tariffs.

These tariffs could lead to higher demand for Indian chemical exports, particularly for key molecules like pydilflumetofen and glufosinate, which are among the top imports by the US.

In this article, we explore the chemical companies that stand to benefit most from the evolving trade war, examining their strategies and growth potential in a landscape transformed by global tariffs.

Let's have a look at these companies one by one.

#1 PI Industries

First on our list is PI Industriesv.

PI Industries is a leading player in the agrochemical space, specialising in insecticides, fungicides, herbicides, and specialty products.

With over five decades of experience, the company has built a strong presence both domestically and globally, operating in over 30 countries. Its vast distribution network includes 10,000 active dealers and more than 100,000 retailers across India.

The agrochemical company has seen impressive growth between 2020 and 2024, with sales more than doubling and net profit nearly tripling.

Coming to its financials, PI Industries reported a sales growth of 4.9% YoY to Rs 22.2 bn, in Q2 FY25.

The operating profit for the quarter stood at Rs 6.3 bn. The operating profit margin for the quarter stood at 28%, versus 26%, in Q2 FY24.

The net profit for the quarter stood at Rs 5.1 bn versus Rs 4.8 bn, in Q2 FY24. The net margin for the quarter stood at 22.8%, versus 22.7%, in Q2 FY24.

The company is expected to release their third quarter earnings in the second half of 6th February 2025.

PI Industries Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	19%	36%	16%	23%	18%
Gross Profit Margin (%)	45%	44%	45%	45%	50%
Operating Profit Margin (%)	21%	22%	22%	24%	26%
Net Profit Margin (%)	14%	16%	16%	19%	22%
Return on Capital Employed (%)	23%	22%	17%	22%	24%
Return on Equity (%)	17%	14%	14%	17%	19%

Source: Ace Equity

Going forward, the company has downgraded its FY25 revenue guidance from around 15% growth to a more conservative high single-digit growth, reflecting weaker demand and global market pressures. This cautious outlook has raised concerns among investors.

Despite these short-term headwinds, PI Industries remains optimistic about its long-term prospects. The company is focused on expanding its CSM business with new molecule commercialisation and product launches.

It's also targeting growth in its pharma API and Contract Development and Manufacturing Organization (CDMO) segments.

If these initiatives succeed, the stock could regain its momentum, though the market remains cautious for now given the ongoing challenges.

To know more about the bank, check out its financial factsheet and latest quarterly results.

#2 UPL

Second in the list is UPL.

UPL is principally engaged in the business of agrochemicals, industrial chemicals, chemical intermediates, speciality chemicals and production and sale of field crops and vegetable seeds.

It has an extensive portfolio of products, with over 14,000 products registered under its name, which it supplies to over 140 countries.

The company has 43 manufacturing facilities across the world and has a network of over 85,000 retailers and 25,000 dealers. UPL also has 30 research and development (R&D) facilities and has been granted over 1,800 patents.

It's the 5th largest agrochemical company, 6th largest global crop protection company, and is also the largest speciality chemicals company in India.

Coming to its financials, the company reported a 10% increase in revenue, reaching Rs 109.1 bn, in Q3 FY25. This growth was driven by a 9% rise in volumes and a 5% uptick in pricing.

The operating profit for the quarter experienced a significant jump to Rs 16.8 bn, versus 670 m, in Q3 FY24. The operating profit margin for the quarter stood at 15%, versus 1%, in Q3 FY25.

The net profit for the quarter stood at Rs 8.5 bn versus a loss in Q3 FY24. The net margin for the quarter stood at 7.8%.

UPL Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	64%	8%	20%	16%	-20%
Gross Profit Margin (%)	48%	51%	52%	49%	43%
Operating Profit Margin (%)	19%	22%	21%	19%	10%
Net Profit Margin (%)	6%	9%	10%	8%	NM
Return on Capital Employed (%)	10%	13%	14%	14%	3%
Return on Equity (%)	11%	17%	18%	16%	NM

Source: Ace Equity

Going ahead, UPL plans to enhance its product portfolio, with a greater focus on differentiated and sustainable solutions. Expansion in biologicals and high-value agrochemicals is a priority.

The company aims to increase the contribution of its natural plant protection (NPP) business, which has shown strong traction, especially in Europe and Brazil. This shift towards premium offerings is expected to boost margins and reduce reliance on price-sensitive generic products.

Geographical expansion remains an integral part of UPL's strategy. Latin America has been a major revenue driver, but it's also strengthening its presence in North America and Europe.

Investments in regional partnerships, supply chain optimisation, and product registrations will help UPL capture market opportunities.

To know more about the company, check out UPL fact sheet and quarterly results.

#3 Jubilant Ingrevia

Next in the list is Jubilant Ingrevia.

Jubilant Ingrevia, a global integrated life science products and innovative solutions provider serving, pharmaceutical, nutrition, agrochemical, consumer and industrial customers.

The company offers a broad portfolio of high-quality ingredients that find application in a wide range of industries. Its portfolio also extends to custom development and manufacturing for pharmaceutical and agrochemical customers on an exclusive basis.

Coming to its financials, the company reported an increase in the sales of 2.5% YoY to Rs 10.6 bn, in Q3 FY25.

The operating profit for the quarter stood at Rs 1.4 bn. while the operating profit margin stood at Rs 13% versus 10%, in Q3 FY24.

The company saw a growth in the net profit for the quarter to Rs 609 m, versus 390 m, in Q3 FY24. The net profit margin also grew to 6.5%, versus 4%, in Q3 FY24.

Jubilant Ingrevia Snapshot (2021-24)

	FY21	FY22	FY23	FY24
Revenue Growth (%)	-	623%	-4%	-13%
Gross Profit Margin (%)	46%	43%	46%	48%
Operating Profit Margin (%)	17%	17%	11%	10%
Net Profit Margin (%)	8%	10%	6%	4%
Return on Capital Employed (%)	8%	29%	16%	10%
Return on Equity (%)	3%	20%	12%	7%

Source: Ace Equity

Going ahead, its strategic focus is strengthening its market position and driving substantial growth. The company's plans for the coming year are centered around several key areas.

Jubilant Ingrevia is set to build on its recent successes by expanding further into high-growth markets, particularly North America and Japan. These regions have already contributed significantly to revenue growth.

In FY25, the company's capital expenditure will be directed towards enhancing its production capabilities for food and cosmetic-grade Niacinamide.

This investment aims to meet the growing global demand and solidify its leadership in these high-potential product categories. The increased capex is also expected to ramp up production at newly commissioned plants, improving overall efficiency.

To know more about the company, check out Jubilant Ingrevia fact sheet and quarterly results.

#4 Aarti Industries

Next in the list is Aarti Industries.

Aarti Industries, the flagship company of the Aarti group, manufactures organic and inorganic chemicals at its major facilities in Vapi, Jhagadia, Dahej, and Kutch, in Gujarat.

It also manufactures active pharmaceutical ingredients (API) at its units in Tarapur and Dombivali in Maharashtra, and at Vapi. The group has a strong market position in the NCB-based speciality chemicals segment.

Aarti Industries has carried out debt-funded capex of about Rs 42 bn during the five years through 2021, including just over Rs 30 bn in the last three years. The company also has a capex of Rs 45 bn planned in multiple value chains to increase market share.

Coming to its financials, revenue for the quarter increased by 6.2% YoY to Rs 18.4 bn, in Q3 FY25, showing some resilience in demand across certain segments.

However, this growth in revenue was not enough to offset the sharp fall in operating profit, which declined 11.1% YoY to Rs 2.3 bn.

The operating margin also fell to 13%, due to escalating costs and higher competition.

The net profit for the quarter declined to Rs 460 m, versus Rs 1.2 bn, in Q3 FY24. The net margin also saw a decline to 2.5%, versus 7.2%, in Q3 FY24.

Aarti Industries Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	0%	8%	35%	9%	-4%
Gross Profit Margin (%)	58%	60%	61%	51%	45%
Operating Profit Margin (%)	23%	22%	28%	16%	15%
Net Profit Margin (%)	13%	12%	19%	8%	7%
Return on Capital Employed (%)	15%	13%	22%	10%	7%
Return on Equity (%)	18%	15%	26%	11%	8%

Source: Ace Equity

The short-term outlook is challenged by competitive intensity and margin pressure. Aarti Industries expects the additional capacities from its ventures to be earnings accretive if it achieves 60-80% utilisation levels. This should lead to improved profitability in the long term.

The company faces tough competition and margin pressures in the near term. Its strategic focus on product innovation, long-term deals, and joint ventures will be key to sustaining growth.

Its future will depend on its ability to navigate these challenges, manage its costs effectively, and increase its volume growth.

To know more about the company, check out its financial factsheet and quarterly results.

#5 Sumitomo Chemical India

Next on the list is Sumitomo Chemical India.

Sumitomo Chemical India Ltd. (SCIL) is one of the leading players in the industry which has a balanced portfolio of technical as well as formulation products along with backward integration for some products.

The company is known for domestic marketing of proprietary products of its Japanese parent -Sumitomo Chemical Company Limited in agrochemicals, animal nutrition, and environmental health business segments.

Coming to its financials, in Q3 FY25, revenue from the operations increased 15.2% to Rs 6.2 bn from Rs 5.4 bn YoY.

The gross margin for the quarter improved to 41%. The operating profit rose to Rs 1 bn, with an operating margin of 16%.

The net profit after tax increased to Rs 840 m with a net margin of 13.5%, versus 10.2%, in Q3 FY24.

Sumitomo Chemical Snapshot (2020-24)

	FY20	FY21	FY22	FY23	FY24
Revenue Growth (%)	9%	9%	16%	15%	-19%
Gross Profit Margin (%)	34%	44%	44%	41%	42%
Operating Profit Margin (%)	14%	18%	20%	19%	17%
Net Profit Margin (%)	9%	13%	14%	14%	13%
Return on Capital Employed (%)	26%	33%	34%	30%	21%
Return on Equity (%)	17%	23%	23%	21%	15%

Source: Ace Equity

Going ahead, the management is exploring partnerships with other agrochemical players and potential expansion into new product segments.

It has also planned capex of Rs 2.5-3 bn for the next project, which will be financed from internal accruals.

The management is exploring opportunities in the chemicals sector with preliminary discussions initiated by SCC Japan, assuring its commitment to exploring new business avenues and leveraging capabilities for future growth and diversification.

For more details, see the Sumitomo Chemical India company fact sheet and quarterly results.

Conclusion

The ongoing trade tensions between the US and China have undeniably created a volatile environment for the chemical industry, with tariffs acting as a disruptive force that reshapes both risks and opportunities.

Despite the potential for growth in certain sectors, the broader impact on global supply chains and market stability cannot be ignored.

The uncertainty surrounding future policy changes and trade negotiations leaves room for unpredictability, which could ultimately affect the profitability of even the most strategically positioned companies.

As such, investors must remain vigilant and carefully assess any opportunities within the sector, ensuring that they make well-informed decisions amidst a turbulent and shifting landscape.

Investors should also consider corporate governance as one of the criteria for due diligence before considering an investment.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...