2025 was quite volatile for Indian stock markets owing to various factors including geopolitical issues and poor quarterly performance of Indian companies.. Investors expected 2026 to bring in some cheer. Well, we know how that’s turning out.
Since the beginning of this year, the Nifty 50 has tanked around 13%. Over a month, the index has taken a knock of 6.9%. The ongoing Middle East crisis, which has been escalating every day, suggests a sustained market turnaround may elude us for some more time.
Having said that, two specialty chemical stocks have been defying all odds and generating consistent positive returns, including in the past month when everything seems to have gone wrong with the markets.
In fact, these two stocks are even contradicting the overall trend in the chemical sector, which is performing poorly in line with the overall market sentiments.
The Nifty Chemicals Index dropped around 6.26% during the past month, and 11.1% year-to-date (YTD), broadly in line with the markets. (Source: NSE)
NIFTY Chemicals Index 1-Year Trend
Let’s explore both the stocks and try to find out the rationale behind the positive performance of these stocks amidst all the turmoil.
#1 NOCIL Limited: The Rubber Chemical Pioneer
NOCIL Ltd., a part of the Arvind Mafatlal Group, is the largest rubber chemicals manufacturer in the country with around 40% market share. There are over 20 different types of rubber chemicals that this company offers, including all three broad categories: accelerators, anti-degradants, and specialty chemicals, which are sold under the brand names of Pilfex, Pilnox, Pilgard, and Pilcure.
NOCIL’s share price jumped around 20% in the past month, and 8.9% in the past three months.
NOCIL 1-Year Share Price Trend
Consistent Volume Growth
One possible reason for this rubber chemical giant to outdo the market sentiment is perhaps the volume growth, and the expectation of further growth in time to come (more on this later in this article). NOCIL has been witnessing a steady growth in its volume over the past five quarters. Between Q3FY25 and Q3FY26, the sales volume grew by over 6% YoY.
The management expects this volume growth to continue and the full-year growth for FY26 to be within 3% to 4%.
Sales were mainly driven by domestic demand, which improved post GST 2.0 however, the export demand dropped due to the US tariff pressure and also seasonal effects during Q3FY26.
Capacity Expansion
NOCIL has announced a capex program for its manufacturing facility at Dahej, Gujarat, in Q3FY26. This plant is already one of the state-of-the-art facilities operating since 2013.
Currently, it is operating at the optimum, and thus, to expand the production capacity of the facility, the company is infusing ₹250 crores.
This plant is quite close to the petrochemical industry and ports, which helps the company save on transportation costs and increase operational efficiency.
As the capacity comes on stream and stabilises, prospects of further growth in sales volume could be realised.
Increasing Rubber Consumption
Though NOCIL’s export took a hit in previous quarters, the global rubber consumption has been increasing steadily. Out of the entire rubber consumption, which grew from 27.5 million metric tons (MMT) in 2016 to 31.9 MMT in 2024, rubber chemicals consumption constitutes around 3.5%.
India is the third-largest consumer of rubber products, including rubber chemicals, after China and the US.
China Plus One Strategy Benefit
While India is one of the biggest consumers, it is also one of the top suppliers of rubber chemicals. Though China dominates the market with over 80% of the rubber chemicals supply, India is emerging as the next best player in the market.
With the China+1 strategy playing out, global demand is shifting focus to India as the next biggest supplier of these chemicals.
NOCIL, being the largest manufacturer, is expected to benefit from the same.
Sustainable Development and Entry Barriers
It is not just the quantitative factors that set NOCIL apart from other specialty chemicals. The company excels in green chemistry and sustainable growth. The company manufactures most of the rubber chemicals, especially the niche products, using green chemistry concepts.
This is crucial in the rubber chemical industry, which has stringent environmental guidelines. This brings us to a high level of entry barrier in this industry as well. Apart from rigid environmental regulations, the requirement for specialized technical expertise, long-term relationships with the customers, and a prolonged period for plant-specific approvals are some of the factors that increase the entry barrier in this industry.
Flat Revenue Growth Despite Volume Growth
While the sales volume surged during the quarter, due to pricing pressure, the revenue dipped marginally from ₹318.1 crore in Q3FY25 to ₹315.8 crore in Q3FY26. Net profit also marginally decreased from ₹12.9 crore to ₹9.3 crore during the period.
The company is also offering below-average return on capital employed (ROCE). While the industry median ROCE is at 15.46%, NOCIL has a ROCE of 6.7% only.
However, NOCIL offers better dividends compared to the rest of its peers. The company has a dividend yield of 1.23% while the industry median is just 0.36%.
Premium Valuation
The stock is trading at a price/earnings (PE) of 43.2x, higher than the industry median of 25x, indicating a premium valuation.
#2 Aether Industries Limited: Advanced Intermediates Giant
Aether Industries Ltd. is engaged in manufacturing some rare chemicals, such as Methoxyethyl, Phenol, and other advanced intermediates, which no other specialty chemical manufacturing companies in the country do.
Aether operates across different business models where around 41% of its revenue is generated from large-scale manufacturing of these intermediates and chemicals, while Contract or Exclusive Manufacturing constitutes another 43%, and the remaining revenue is generated from Contract Research & Manufacturing Services (as of Q3FY26).
During the past month, the company’s share price surged 8.8%; it jumped 10.3% over the past three months. Over a year, this specialty giant saw its share price surge 36.4%, which most of its peers failed to do owing to pricing pressure, dampening global demand, and market volatility.
Aether Ind 1-Year Share Price Trend
Shift in Revenue Mix
Aether Industries has been successfully diversifying its business lately. Earlier, almost half of its revenue used to come from the pharma sector, which by Q3FY26 reduced to around 31%. On the other hand, 21.8% of the revenue came from the oil & gas sector as compared to just 4.3% a year ago.
Revenue from material science customers also surged from 9.8% to 18% during the period. Agrochemicals contributed to 13.7% in Q3FY26, marginally higher as compared to 11.2% in the corresponding quarter last fiscal. Coatings chemicals, on the other hand, witnessed a decline in the revenue mix from 14.5% to 8.6% during the period.
The company has also entered the semiconductor and electronic chemicals market with customers from Japan, Taiwan, and South Korea. These chemicals will be produced in the upcoming Site 5 of the company.
Major Expansion is Underway
Aether Industries is expanding robustly with multiple site constructions underway, and a few already commencing operations.
Site 3++, which is based in Surat (Gujarat) has already started commercial operations since February 2026. This is an expansion to the already existing Site 3 facility and is expected to produce several new specialty chemicals and intermediates, boosting the overall capacity of the company. The management expects 50% of this expanded site to be utilized during FY27.
Site 5, also under construction, is a major greenfield manufacturing facility in Panoli, Gujarat. The first 2 blocks of Phase 1 are about to begin commercial production. Phase 2 expansion is underway.
It is not only the manufacturing facilities that the company is expanding. As an advanced intermediate producer, the company invests heavily in its research and development (R&D) facilities as well. During 9MFY26, the company invested ₹61 crore in R&D, which is around 7% of its revenues.
A 46% Profit Growth
During Q3FY26, Aether Industries witnessed a massive jump in its sales and profits. Sales jumped from ₹220 crore in Q3FY25 to ₹317 crore in Q3FY26, logging a 44.4% YoY growth. Net profit for the period grew by 46% YoY from ₹43 crore to ₹64 crore.
This might be another reason behind the continuous surge in the share price of the company.
Having said that, the ROCE is around 10%, which is lower than the industry median of 15.5%.
Unlike NOCIL, this specialty giant does not offer any dividends to its shareholders.
Valuation
The stock is trading at a PE of 65x, which is way higher than the industry median of 25.4x, indicating a premium valuation. Even the Price/earnings to growth (PEG) ratio is 4x, higher than the industry median of just 0.2x, suggesting that even adjusted for growth, the stock is currently trading at a significant premium to its peers.
Final Thoughts
These two specialty chemical stocks are not just defying the overall negative market sentiment but also industry-specific challenges.
Having said that, both the stocks have been resilient and are expanding their business in different ways possible. From diversifying their business to major expansion plans are perhaps some of the reasons behind their performance in the stock market, too.
You can add these stocks to your watchlist to keep an eye on their future performance keep an eye on their future performance.
We have relied on data from http://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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