Morgan Stanley has made significant adjustments to its ratings and target prices for several key players in the Indian chemical sector.
Aarti Industries has been downgraded to “Underweight” (UW) with a reduced target price of Rs 568, down from Rs 613. The downgrade reflects Morgan Stanley’s concerns over volume traction at sub-par price points within an increasingly competitive landscape in the first quarter of FY25 (F1Q25). The brokerage believes that the company’s monetization remains in play, but with significantly lower margins, which could impact near-term performance.
PI Industries, on the other hand, has received an upgrade to “Equal Weight” (EW), with a new target price of Rs 4,300, up from Rs 3,350. Morgan Stanley’s positive outlook on PI Industries is driven by its strong fundamentals and potential for growth in the current market environment.
Deepak Nitrite continues to be Morgan Stanley’s top pick in the sector, reaffirmed with an “Overweight” (OW) rating. The target price for Deepak Nitrite has been raised to Rs 3,295 from Rs 2,975, highlighting the brokerage’s confidence in the company’s growth trajectory.
Despite these updates, Morgan Stanley cautions that earnings for the sector are not fully derisked, with upgrades likely to be some time away. The competitive pressures and challenges in monetization at lower margins are expected to continue influencing the performance of chemical companies in the near term.
