The Indian chemicals sector enters Q3FY26 on a mixed footing. While overall revenue growth remains modest, driven by weak exports and sluggish global demand, select specialty players continue to outperform due to contract manufacturing traction, portfolio diversification, and improving utilization levels.

According to sector estimates, revenue for the covered universe is expected to grow ~2.2% QoQ, while EBITDA may rise ~3.7% QoQ, supported by operational efficiencies and favorable product mix at select companies. However, pricing pressures, especially from China, and soft demand in Europe continue to cap broad-based upside.

Sector Snapshot : What’s Driving Q3FY26 ?

Several cross-currents define the quarter:

• Exports to MNC agrochemical and pharmaceutical clients improved sequentially, offering some relief after multiple weak quarters.

• MMA prices remained range-bound, with offtake broadly in line with Q2 levels.

• Acetonitrile import prices declined ~10% QoQ, as Chinese suppliers cut prices following the imposition of anti-dumping duties (ADD) by the Indian government—intensifying competitive pressure on domestic producers.

• Oleochemical demand moderated, while palm oil prices remained range-bound, limiting margin expansion in downstream products.

• European pigment and coatings markets stayed sluggish, with aggressive pricing from Chinese and Indian players increasing rivalry and pressuring realizations.

Against this backdrop, companies with high-value fluorochemicals, CDMO exposure, and niche intermediates are expected to outperform, while commodity-heavy players face margin and volume stress.

Expected Sector Leaders : Stock-Specific Insights

Navin Fluorine - Strong Outperformance Continues

Navin Fluorine stands out as one of the strongest performers this quarter. Its chemical business (AHF, fluorospecialty chemicals, and CDMO) is expected to grow ~50% QoQ, driven by robust offtake from Fermion and key agrochemical intermediates.

While refrigerant gas exports declined seasonally, R32 prices remained firm, and the Honeywell business maintained its YTD run rate.

• Revenue: +40% YoY / +12.2% QoQ to ₹8.5 bn

• EBITDA Margin: 32.7% (+840 bps YoY / +24.4 bps QoQ)

Key takeaway: Navin Fluorine remains a high-conviction play on India’s fluorination and CDMO opportunity.

Aarti Industries - Stability Over Growth

Offtake from MMA remains stable, with prices largely unchanged from Q2FY26. While YoY growth looks healthy, sequential momentum remains muted.

• Revenue: +18.7% YoY / +4% QoQ to ₹21.84 bn

• EBITDA Margin: 13.7% (+104 bps YoY / -20.7 bps QoQ)

Key takeaway: Earnings stability persists, but near-term triggers remain limited.

Vinati Organics - Gradual Improvement

Vinati Organics is expected to see a moderate pickup in ATBS volumes, while pricing remains steady.

• Revenue: +13.5% YoY / +7.6% QoQ to ₹5.9 bn

• EBITDA Margin: 31.1% (+381 bps YoY / +60.4 bps QoQ)

Key takeaway: Margin recovery remains the key positive, supporting valuations.

Clean Science and Technology - Transition Phase

Clean Science has commercialized hydroquinone and catechol, with samples sent to customers. HALS exports are expected to rise ~33% QoQ, supported by an expanded product basket.

However, near-term financials remain under pressure:

• Revenue: -10.1% YoY / -11.1% QoQ to ₹2.16 bn

• EBITDA Margin: 35.3% (-761 bps YoY / -32 bps QoQ)

Key takeaway: Medium-term optionality is intact, but near-term earnings remain soft.

SRF - Resilient but Not Accelerating

Specialty chemical exports remain stable, while refrigerant gas exports declined modestly. R32 realizations held steady.

• Revenue: +6.6% YoY / +2.2% QoQ to ₹37.2 bn

• EBITDA Margin: 22% (+330 bps YoY / -8.8 bps QoQ)

Key takeaway: Defensive performance, but growth acceleration is awaited.

Aether Industries - Utilization-Led Growth

Revenue growth is driven by higher utilization at the Baker Hughes plant, with margins holding firm.

• Revenue: +29.7% YoY / +3.6% QoQ to ₹2.85 bn

• EBITDA Margin: ~29.8% (flat QoQ)

Key takeaway: Execution-led growth keeps the outlook constructive.

Expected Laggards : Margin & Demand Challenges

• Fine Organics: Weak QoQ revenue (-12%) despite YoY margin improvement.

• Galaxy Surfactants: Range-bound raw material prices limit margin recovery; EBITDA at ~8.3%.

• Sudarshan Chemicals: Sharp margin compression to ~6.4% despite revenue growth.

Other Notable Mentions

• Deepak Nitrite: IPA and acetone prices declined ~8% QoQ; margins show modest recovery.

• Acutaas Chemicals: Strong revenue growth, but QoQ margin pressure persists.

• Neogen Chemicals: Gradual revenue recovery with mixed margin trends.

• NOCIL: Margins improving on cost efficiencies.

• Balaji Amines: Healthy YoY margin expansion to ~19.4%.

Bottom Line : Selectivity Is Key

Q3FY26 reinforces a familiar theme for the chemicals sector—this is not a broad-based upcycle. While global demand remains uneven and Chinese pricing pressure persists, companies with strong customer linkages, niche chemistries, and CDMO exposure continue to outperform.

Preferred picks: Navin Fluorine, Aarti Industries, Aether Industries, Acutaas Chemicals, SRFCautious stance: Fine Organics, Galaxy Surfactants, select pigment players

Investors should remain highly selective, focusing on execution quality, balance sheet strength, and long-term contracts rather than near-term volume growth alone.