Kacholia exits chemical stocks as China, Iran hit margins
A prominent Indian investor’s decision to reduce holdings in two surging chemical firms signals growing market anxiety over raw material costs and Chinese competition.
Ashish Kacholia has reduced his stakes in Yasho Industries and Fineotex Chemicals, capitalising on significant share price gains. According to BSE data for the March 2026 quarter, Kacholia cut his Yasho holding to 2.08% from 2.37% and lowered his Fineotex stake to 2.06% from 2.60%. The sales follow a 114% year-to-date rally in Yasho Industries and a 58% six-month gain for Fineotex Chemicals.
Kacholia is one of India’s most tracked small-cap investors, making his portfolio adjustments a closely watched sentiment indicator for retail and institutional investors. His decision to take profits comes as the sector faces a confluence of structural pressures that threaten to compress profitability for commodity chemical manufacturers.
Elevated raw material costs and softening demand remain primary concerns. Disruptions from the West Asia conflict have driven up crude oil prices, increasing the cost of crude-derived feedstocks like naphtha, benzene and methanol. JM Financial observed that while non-discretionary demand remains stable, discretionary demand has weakened due to higher prices. Although a weaker rupee supports export realisations, the brokerage expects supply chain bottlenecks around the Strait of Hormuz to persist for another one to two quarters.
Compounding these input cost pressures is aggressive competition from China. InCred Equities highlighted that Chinese producers have expanded capacity well beyond demand, exporting surplus petrochemicals and intermediates at lower prices. The brokerage warned that Indian manufacturers remaining in commoditised products face ongoing pricing and margin pressure. InCred advised that Indian firms should instead leverage China's lower production costs by importing inputs and moving downstream into higher-value areas like pharma intermediates, agrochemical formulations, food additives and electronic chemicals.
The divergence between commodity and specialty chemicals is expected to define the upcoming earnings season. Axis Direct anticipates a mixed Q1 FY27 for the sector, noting that a delayed southwest monsoon has pushed Kharif-related agrochemical demand into the second quarter. While pricing pressure from China will limit margin expansion for basic chemical makers, the brokerage projects outperformance for companies focused on CDMO, fluorochemicals and refrigerants, as well as mid-cap firms supported by strong domestic infrastructure order books.
