New Delhi, Nov 1 (NationPress) - A resurgence in exports following two challenging years is set to elevate the revenues of India's agrochemical sector by 6-7 percent this financial year, according to a report released on Monday.

This growth will be bolstered by a timely recovery in global demand and the normalization of inventories, especially as domestic sales are slowing due to a prolonged monsoon that has adversely affected kharif season sales.

However, the industry’s ability to revert to its long-term growth trajectory of 8-10 percent next fiscal year will depend on the sustainability of export momentum and a rebound in domestic demand, Crisil Ratings noted in its analysis.

Stable realizations, consistent raw material costs, and minimal impact from US tariffs are expected to keep operating margins steady throughout this fiscal year and the next, the report highlighted.

Furthermore, modest capital investments and stable working capital levels are likely to enhance leverage discipline, thereby helping to sustain credit profiles that have faced pressure in recent years.

The agrochemical sector is experiencing a recovery in export growth after two years of volatility, driven by stabilizing global supply chains and improved demand.

Latin America (34 percent), North America (19 percent), and Europe (12 percent) account for over 65 percent of export revenues. While Latin America is seeing gradual growth, Europe is on the road to recovery as inventories are normalizing.

The US market remains stable, with 80-85 percent of Indian shipments enjoying tariff exemptions. India's trade position in the US is also strong, with the US sourcing 70 percent of its agrochemical requirements from China (50 percent) and India (20 percent).

“A positive global farm sentiment will lead to an 8-9 percent increase in export revenue this fiscal. However, domestic demand may suffer due to excess rainfall causing crop damage, product returns, and delays in field readiness,” warned Anuj Sethi, Senior Director at Crisil Ratings.

With realizations stabilizing after significant adjustments over the past two years, the overall growth outlook of 6-7 percent is expected to be more volume-driven than price-driven, Sethi added.

Domestic agrochemical prices have stabilized as the post-lockdown inventory surplus from China has eased. Realizations on agrochemical imports from China have remained around $5 per kg, consistent with last year's figures.

With inventories now balanced and stricter enforcement of environmental regulations ensuring a stable supply flow, realizations are anticipated to remain steady throughout the year.

The report is based on an analysis of approximately 60 companies, which collectively represent nearly 90 percent of the industry revenue amounting to Rs 90,000 crore.