Better product mix help chemical players in volatile markets

At a time when the entire country is shut down and industries such as airline and hotels are on the verge of collapse; alcohol-based chemical industries can be seen as better placed. Along with specialty chemical companies, specific products can be used in the medication of virus and also, be looked after by the investors.

The current lockdown situation is expected to have a lesser impact on the fast moving goods such as cosmetics, soaps and food flavour etc. The mid-cap major fine organics has outperformed the market fall due to the expectation of less demand constraints in the near future. Between February 20 and April 7, Sensex fell as much as 28 per cent while, fine organics has surged 24 per cent since March 23, 2020.

For the requirement of essential products for better prevention of COVID-19, the authorities have eased the lockdown thereby, allowing the companies to start their production. Gujarat Alkalies informed that its plants are partially operating for manufacturing of few essentials. Since March 23, the stock has given stellar returns of nearly 60 per cent.

India Glycols Ltd has also shown a strong outperformance with returns of 37 per cent since March 23. The company thrives to benefit from its product mix, which include glycols, ethylene oxide (EO) derivatives and ethyl alcohol having a wide range of applications.

The market fall comes at a heavy price for the investors; especially retail but smart stock picking can certainly come handy. The above-mentioned stocks are the perfect examples of such investment ideas.