The global chemical sector has been on the cusp of oversupply and muted demand across Western markets. China, being one of the primary suppliers of chemicals globally, increased its chemical production by 8% during the H1CY25, which further worsened the global oversupply.

Having said that, the specialty chemical sector has been witnessing healthy demand from different sectors such as pharma, agrochems, and diversified manufacturing, which is helping the specialty chemical companies sustain when the overall sector is facing a decline in realisations as well.

Coming to the Indian chemical market, it is undergoing a complete structural transformation, which is helping it grow even in a slowing global market.

One of the reasons is again India’s transition into specialty chemicals. As of March 2025, specialty chemicals accounted for around 47% of the overall domestic chemical market, and the same is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11% until 2030.

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During January 2026, while bulk chemicals and solvents witnessed muted demand, dragging the prices down, specialty chemicals, especially aromatics, witnessed modest gains due to steady demand.

And this tilt towards specialty chemicals is evident across institutional investments as well.

During Q3FY26, the chemical stocks that Domestic institutional investors (DIIs) bought aggressively have one thing in common: they are not bulk chemical manufacturers; instead, they deal in very niche chemicals.

Today , we will cover two such specialty chemical stocks where DIIs raised their stake significantly during the quarter, taking the overall holding above 10%.

#1 Privi Speciality Chemicals: The Aroma Stock with a 94% Profit Surge

Privi Speciality Chemicals Ltd. is the leading manufacturer, supplier, and exporter of aroma chemicals with tie-ups across top 15 fragrance companies in the world, apart from other FMCG and MNCs. The product portfolio of Privi is widely diversified, with over 75 products with a production capacity (as of February 2026) of around 48,000 MTPA.

However, it is not just these numbers that set Privi apart, but its sustainable approach and undeniable strength in Pine Chemistry make it a global leader in the aroma manufacturing space.

During Q3FY26, DIIs raised their stake by 5.7% points in this fragrance molecule maker, taking the total holding to 10.3% at the end of the quarter. SBI Multi Asset Allocation Fund is one of the top stakeholders, which raised its stake from 3.6% in the previous quarter to 9.4% in Q3FY26.

Commissioning of PRIGIV

During 2025, Prigiv, a joint venture between Privi Specialty Chemicals and Givaudan, a global leader in the fragrance market based in Switzerland, commenced its operations in the state-of-the-art plant, located at Mahad, Maharashtra.

During Q3FY26, Prigiv started seeing positive earnings (EBITDA – Earnings before interest, taxes, depreciation, and amortization), and the management expects the profits to improve in the upcoming quarters.

They are also infusing more equity capital for further expansion projects to seize the growth opportunity in the market. Jointly, Privi and Givaudan are infusing around ₹50 crore for immediate expansion projects.

Apart from that, for reducing the debt burden on Prigiv, Givaudan is providing ₹150 crore as a trade advance (non-interest-bearing).

Prigiv is also considering infusing another round of capex for manufacturing high-value speciality molecules, which have the potential to generate around ₹100 crore of revenue.

Robust Expansion Plans

During 2025, the company added three new products to its already well diversified products basket. They launched Floravane, Indomerane, and Amber Woody Xtreme.

Apart from these new offerings, the company has a ₹600 crore capex plan for adding new multi-specialty products, and especially for entering the flavour segment. The project is expected to be commissioned by the first quarter of FY28. The peak revenue potential of this project is forecasted between ₹1,100 crore and ₹1,200 crore per annum.

For new high-end specialty products, the company is infusing another ₹300 crore, and the projects are expected to start from Q3FY28. This has a potential maximum revenue of around ₹500 crore to ₹600 crore annually.

For the existing product portfolio, Privi has announced a capex of ₹300 crore, which will be commissioned in this current quarter (Q4FY26) and is expected to generate revenue between ₹400 crore and ₹450 crore per annum.

Backward Integration with CST

Backward integration with CST (Crude Sulphate Turpentine) processing is a process that is extremely niched and only four companies globally have the technology, and Privi is one of them. However, that’s not all, Privi is the largest single CST processing site in the world, with a capacity of 36,000 MTPA.

The advantages of the CST process include high supply chain visibility, as the by-products of the Kraft (paper) industry are used for deriving captive α & β Pinenes. Then a price advantage of around 15% to 20% over the GTO (Gum Turpentine Oil) process, along with price stability.

Amalgamation of Fine Sciences and Biotechnology Underway

The company is also considering the amalgamation of Privi Fine Sciences Private Ltd. and Privi Biotechnologies Private Ltd. into Privi Speciality Chemicals Ltd. This is a planned integration for enhancing and strengthening core operations of the business, unlocking faster growth via combined expertise in the aroma chemicals segment.

Apart from that, the biotech-focused research and development expertise from Privi Biotechnologies can be put to use for specialising in biotech-driven flavour and fragrance development. This amalgamation is also expected to offer green science advantage via sustainable chemistry solutions and more.

Solid Business Growth Aligning with 5k:1K Vision

The aroma manufacturer has set a target to achieve a revenue (annual) of ₹5,000 crore in coming 3-4 years, and EBITDA of ₹1,000 crore. The current financials are aligned with the vision.

The total income for 9MFY26 stood at ₹1,857 crore, up from ₹1,493.5 crore recorded in 9MFY25, logging a 24% YoY growth. Similarly, the EBITDA grew from ₹326.7 crore to ₹481 crore, at a whopping 47% YoY during the period. The profit grew by a massive 94% YoY from ₹120.5 crore to ₹233.8 crore during the period.

Valuation

The stock is currently trading at a price/earnings (PE) of 39x, higher than the industry median of 28.4x, indicating a premium valuation. Similarly, the price/earnings to growth (PEG) ratio is 1.5x, way higher than the industry median of 0.2x, suggesting that even adjusted for growth, the stock is currently overvalued.

1-Year Share Price Chart of Privi Speciality Chemicals Ltd.

#2 Styrenix Performance Materials Limited: Engineering Polymer Powerhouse

Styrenix Performance Materials Ltd. is a leading engineering polymer manufacturer specialising in manufacturing Acrylonitrile Butadiene Styrene (ABS) and Styrene Acrylonitrile Resin (SAN).

DIIs raised their stake by 3% points during Q3FY26, taking the total holding to 15.8% at the end of the quarter. Amongst the DIIs raising or buying stake, Bandhan Small Cap Fund bought a significant stake of 2.5% in Styrenix during the quarter, while Nippon Life India Trustee Ltd. raised its stake from 5.7% to 6.3% quarter-on-quarter (QoQ).

Market Leadership in ABS and SAN Manufacturing

While the polymer manufacturing space is overcrowded, Styrenix’s specialization in manufacturing engineering polymers is perhaps the reason that sets it apart. The company’s primary brands include ABSOLAC® for ABS and ABSOLAN® for SAN. Other polymers and blends include ASALAC® and STYROLOY®, and polystyrene brands include STYRENIX®PS (HIPS) and STYRENIX®PS (GPPS).

ABSOLAC® is a specialty ABS for high aesthetics and performance, which is primarily used for automotive interiors and exteriors, household appliances, electronics gadgets, parts and electrical products, and other stationary items as well.

On the other hand, ABSOLAN® is a transparent and stiff S tyrenics polymer which is primarily used in stationery and novelty items, household appliances, transparent parts, cosmetic jars, and AC Fan blades.

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The other polymers and blends also have uses across multiple sectors, like in automotive, PVC cap stock, roofing sheet, electronics, household products, and even in gardening equipment.

With the polystyrene brands of Styrenix, it is penetrating the food packaging sector, along with healthcare, labware, refrigerator components, toys, consumer goods, and household goods too.

Capacity Expansion

Currently, the company has 4 domestic manufacturing units and one international production unit. The total capacity of producing ABS is around 1,85,000 MTPA, while for SAN is 2,00,000 MTPA, Polystyrene 1,00,000 MTPA, Rubber 27,000 MTPA, and HRG Rubber 31,000 MTPA.

The company is expanding its ABS production capacity by 50,000 MTPA, and phase I of the project is currently under implementation as per schedule.

INEOS Styrolution Thailand Acquisition

At the beginning of 2025, Styrenix acquired 100% stake in INEOS Styrolution, which is a Thailand-based company manufacturing engineering polymer products. This acquisition helped Styrenix to set up its first-ever international production unit. With this acquisition, the company not only doubled its production capacity but improving the product mix, especially with the manufacturing of HRG rubber. The acquisition also helped the company go global and expand the customer base beyond India.

As per management, they are exploring further opportunities in high-margin, unique grades of ABS, which are used in refrigeration liner applications.

Mixed Financial Growth

Total income grew from ₹2,052 crore in 9MFY25 to ₹2,619.4 crore in 9MFY26, logging a 27.7% YoY growth. While the income has significantly increased during the period, the profit has declined from ₹179 crore to ₹109.4 crore.

DIIs raising their stake despite declining profits, perhaps indicates their long-term conviction about the stock.

Valuation

The stock is currently trading at a PE of 19.7x, which is lower than the industry median of 28.2x, indicating the stock might be underpriced. However, the PEG ratio stands at par with the industry median at 2.7x.

1-Year Share Price Chart of Styrenix Performance Materials Ltd.

Final Thoughts

While the global chemical market is grappling with oversupply, smart institutional capital is finding its way to highly niche specialty chemicals. DIIs raising stake in the above mentioned two companies is a testimony to that.

While capacity and capex expansions are pivotal to the growth of these companies, their specialised knowledge and manufacturing setup are something that sets them apart as market leaders in their respective domains. Maybe consider adding these stocks to your watchlist so you can track how these specialty players perform in the months and years to come .

Disclaimer:

We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only. 

Maumita Mitra is a seasoned writer specializing in demystifying the world of investment for a broad audience. She has a keen eye for detail and a knack for explaining complex financial concepts in the simplest manner possible. 

Disclosure: The writer and her dependents do not hold the stocks discussed in this article. 

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