5 Chemical stocks leading India’s aroma chemical market to look out for

Synopsis: In India’s aromatic chemical market, which includes synthetic fragrance molecules, essential oils and upstream intermediates that support the perfume and FMCG industries around the world, five companies are gaining prominence: Privi Speciality Chemicals Ltd., Atul Ltd., Oriental Aromatics Ltd., S H Kelkar & Company Ltd. and Gem Aromatics Ltd.

The aromatic chemicals segment of India’s overall chemical industry has received significant attention from investors due to the growing global demand for fragrance products and personal care items as well as for specialty aroma ingredients.

Several listed firms represent various stages of the fragrance value chain, including pure-play aroma molecule manufacturers, fragrance formulations and upstream chemicals, and these five stocks represent each area of the fragrance value chain. They provide investors with access to a variety of synthetic aroma compounds, essential oils, fine chemicals and custom-made perfume products.

Privi Speciality Chemicals Ltd

Privi Speciality Chemicals Ltd (formerly known as Privi Speciality Ltd) is primarily engaged in the manufacturing, supply and export of aroma and fragrance chemicals used in soaps, detergents, shampoos, and other fine fragrances. With the market cap of Rs 10,591 crore, the shares of Privi Speciality Chemicals Ltd closed at Rs 2,711  and are trading at a PE of 35.2, whereas its industry PE is at 27.8

India’s Privi is a leading producer of aroma chemicals and high-value fragrance molecules utilised by global perfumers and FMCG companies. The company specialises in producing synthetic aroma materials such as musks, sandalwood substitutes, speciality fragrances, etc. Additionally, it has a strong B2B customer base that supplies international fragrance manufacturers, allowing them to be an integral upstream component of the perfumery supply chain globally.

Atul Ltd

Atul Ltd. is a diversified and integrated Indian chemical company (a part of the Lalbhai Group, Gujarat). The products of the company are used in various industries and come mainly under two segments, Life Science Chemicals and Performance and Other Chemicals, under 9 businesses. With the market cap of Rs 19,317 crore, the shares of Atul Ltd closed at Rs 6,561 and are trading at a PE of 32.5, whereas its industry PE is at 27.8.

Atul is not solely a fragrance company, though Atul has strong participation via the supply of aromatic intermediates and fine chemicals to be used by flavour and fragrance manufacturers. Boxi’s involvement is through the upstream parts of the fragrance supply chain; Atul supplies key chemical intermediates required by flavour and fragrance manufacturers to convert those intermediates into finished scent molecules packaged as fragrance products.

Oriental Aromatics Ltd

Oriental Aromatics Ltd is a manufacturer of speciality-based aroma chemicals, camphor, and flavour and fragrance products. With the market cap of Rs 993 crore, the shares of Oriental Aromatics Ltd closed at Rs 295 and are trading at a PE of 342, whereas its industry PE is at 27.8.

Oriental Aromatics manufactures camphor, aroma chemicals, and fragrance components under one roof. The company’s aroma products are utilised as ingredients in perfumes, personal care products, incense, and household products. Thus, Oriental manages both backwardly and forwardly integrated transactions within the perfume ecosystem by having both raw materials and finished fragrance blend capabilities.

S H Kelkar & Company Ltd

S H Kelkar and Company Limited is engaged in manufacture, supply and export of fragrances and aroma ingredients It is the largest domestic fragrance producer in India and the only company of Indian origin to file patents in the field of fragrance & novel aroma molecules. With the market cap of Rs 2,311 crore, the shares of S H Kelkar & Company Ltd  closed at Rs 167  and are trading at a PE of 24.9, whereas its industry PE is at 27.8

S H Kelkar is a perfume creator that makes custom fragrances for fast-moving consumer goods, personal care, and household goods companies. S H Kelkar works much more closely with the brands that deliver these products; instead of selling only base aroma chemicals, they provide complete scent solutions using finished fragrances and signature scent styles.

Gem Aromatics Ltd

Gem Aromatics Limited manufactures speciality ingredients, including essential oils, aroma chemicals, and value-added derivatives in India. With the market cap of Rs 1,008 crore, the shares of Gem Aromatics Ltd closed at Rs 193 and are trading at a PE of 35, whereas its industry PE is at 27.8.

Gem Aromatics supplies a wide variety of mint derivatives, essential oils, cooling agents, etc., to the perfume industry and beyond. While its products target primarily aroma ingredient applications, it also serves international clients that need both synthetic and natural aromatic compounds.

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