Synopsis:
- During FY23, the domestic dye, dye intermediates, and pigment (D&P) industry experienced a decline in demand from its primary end-user, the textile industry. Additionally, the industry faced significant challenges due to sharp fluctuations in input costs, including raw materials, fuel, and freight. Consequently, major players in the industry saw a moderation in Total Operating Income (TOI) by over 5% and a contraction in operating profitability of around 400 basis points.
- Factors such as high inflation across major economies, disruptions stemming from the Russia-Ukraine war and competition from low-cost Chinese products impacted the industry performance.
- While headwinds are expected to continue in H1FY24, CareEdge Ratings expects some improvement in performance in H2FY24 backed by an anticipated revival in demand from the textile industry and stabilization of input prices. Volume-backed revival in TOI, near to FY22 level along with a 100 to 150 bps expansion in operating profitability over FY23 is envisaged.
- Despite subdued performance, the solvency position of major players is expected to remain comfortable in FY24.
