Balaji Amines, Alkyl Amines, Deepak Nitrite, Aarti Ind: Why chemical stocks rallied up to 20% today; targets

Shares of Balaji Amines Ltd, Alkyl Amines Ltd, Deepak Nitrite Ltd, SRF and Aarti Industries Ltd climbed up to 20 per cent in Tuesday's trade amid hopes of a strong set of September quarter results, thanks to better product realisation. Companies such as Deepak Nitrite, SRF, Aarti Industries, Navin Fluorine, Gujarat Fluorochemicals, and Sudarshan Chemical may see strong year-on-year (YoY) recovery, while Alkyl Amines, Balaji Amines, Atul and Vinati Organics are likely to see sequential earnings pressure, as per a report by Elara Securities.

Balaji Amines shares were locked at 20 per cent upper circuit limit at Rs 2,349.30. Deepak Nitrite Ltd was up 3 per cent at Rs 1,542. Aarti Industries rose 2.93 per cent to Rs 484.65. Gujarat Fluorochemicals Ltd added 3.22 per cent to Rs 4,572.60. Atul gained 2.39 per cent to Rs 5,996. Vinati Organics, SRF, Navin Fluorine and Sudarshan Chemical added up to 1 per cent.

Elara Securities said Q2FY27 price trends were mostly constructive for refrigerants, PTFE, select agrochemicals, 2,4 -D, and some specialty intermediates. Sequential normalization in ammonia and methanol is encouraging, but sulphur, acids , and aromatics remain materially above the past year and limit broad -based margin expansion.

"We see the cleanest Q2 earnings momentum in Deepak Nitrite, Aarti Industries and for
fluorochemicals – SRF, FLUOROCH and NFIL. We expect a weaker sequential print from amines
names, A TLP and V O, although the latter's medium -term earnings visibility remains linked to its new capacity ramp -up," it said.

The biggest change in Q2 when compared with Q1 was that product realization recovered across a broader set of chains, but feedstock relief is highly uneven.

"Ammonia and methanol have corrected sequentially, but sulphur, sulphuric acid, hydrochloric acid, nitric acid , and fluorspar remain elevated or have increased further.
Hence, Q2FY27 looks more like a realization -led earnings recovery than a clean spread -recovery quarter," it said.

Elara expects earnings of its chemicals coverage universe to remain strong YoY in Q2FY27, but improve only modestly sequentially, as better product realization is partly offset by persistent inflation in several key feedstocks.

Its price tracker indicates strong YoY pricing across refrigerants, Polytetrafluoroethylene (PTFE), agrochemical intermediates, 2,4-D and select specialty chemicals.

"Sequentially, ammonia and methanol prices declined 29 per cent and 13 per cent, respectively, offering relief to the amines chain. However, sulphur, sulphuric acid, hydrochloric acid, nitric acid, and fluorspar rose 21 per cent QoQ, 20 per cent QoQ, 37 per cent QoQ, 14 per cent QoQ, and 10 per cent QoQ, respectively. Thus, Q2FY27 is likely to be characterized by better realization but on a select basis, rather than broad-based margin expansion," Elara Securities said.