VP Chintan Baithak - 2018 - Changing Dynamics of Chemical Industry: Impact of China

[Mridul]

@saurabhricha

Sustainability: Can we term this sector as long term compounder ? If we talk about China factor, it is one off and the same can happen with Indian govt. regulations in future as well.

What is the impact on manufacturers of intermediates for Bulk drugs API. Does it also benefit from dual factors of China shutdown and India focusing more on this side with bulk drugs park, etc ?

Should we target market leaders in this segment or new entrants / SME segment gives better return ratio ? I know this is very subjective and depends on companies, products, management, balance sheets, etc. but just to get your opinion on this.

1. I would look for good mgmts that can milk this opportunity…not everything will compound. India has already gone through this pain in earlier years as depicted in one of the slides. But yes, future is fuzzy. Things can change with environmental concerns gaining traction.

2. Intermediate, advanced intermediates that go into API manufacturing have got good tailwinds due to China closures.

3. If you are looking for compounders, mgmt is the most critical factor. Though, there are many short term plays as well. I would go with multiproduct companies with inherent strength and ethical but hungry mgmt.