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The Indian chemical sector saw a dream run through FY17-22 when it rallied at 48% CAGR against Nifty’s 14% and Nifty 500’s 13% rise in the same period. Key drivers for the rally were (a) favorable global demand supply, (b) shutdown of Chinese capacities, (c) India’s rising competitiveness, and (d) a significant improvement in product development led by a rise in R&D spending. As a result, the forward one-year PE across stocks got re-rated from 10x in 2013 to 20x in 2017, reaching a peak of 46x.
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