The revenue of the agrochemicals industry is anticipated to increase by 7-9 percent in FY2026, driven by steady domestic demand and a rebound in export volumes. Following a modest growth of 5-6 percent in the ongoing fiscal year, the agrochemicals industry is set to expand by 7-9 percent in the upcoming fiscal year, as per Crisil.

The increase will be supported by consistent domestic demand and a rebound in export volumes. Nonetheless, historically low realizations will keep obstructing a return to the double-digit growth observed prior to the Covid-19 pandemic, it stated.

Operating margins are gradually improving, increasing by 100 basis points to 12-13 percent, yet remain below the pre-pandemic figures of 15-16 percent. This will result in companies being careful with capital spending and concentrating on managing working capital to ensure their cash flows and balance sheets remain stable.

"Revenue from exports, which comprises half of the sector's total revenue, is witnessing change. Global firms have largely resolved their excess inventory issues related to low-cost Chinese supplies and are now ordering closer to the cropping season to better manage working capital.

"While we expect healthy volume growth this fiscal, revenue growth will be modest at 3-4 per cent amid pricing pressures from competitively priced Chinese products. In the next fiscal, this may improve to over 7 per cent as these pressures ease," Crisil Ratings Senior Director Anuj Sethi said.