Three Undervalued Chemical Stocks for Your 2026 Watchlist
The article identifies three undervalued chemical stocks—Sumitomo Chemical India, PI Industries, and Atul Ltd—for a 2026 watchlist, based on criteria like zero debt-to-equity and strong return on equity/capital employed. While Q2FY26 saw revenue and profit drops for Sumitomo and PI Industries due to market conditions, Atul Ltd reported sales and profit increases, benefiting from anti-dumping duties. The piece stresses that valuation is subjective and independent investor research is crucial before making investment decisions.
This article highlights three chemical stocks—Sumitomo Chemical India, PI Industries, and Atul Ltd—identified as potentially undervalued for a 2026 watchlist. These selections were based on specific criteria including a debt-to-equity ratio of 0, return on equity of 9% or more, and return on capital employed exceeding 12%. The article emphasizes the subjective nature of valuation and the importance of independent research, explicitly stating it is not investment advice. Sumitomo Chemical India, a debt-free company with strong RoE (17.5%) and RoCE (23.7%), reported a Q2FY26 revenue of ₹929.8 crore and net profits of ₹177.8 crore, both down year-on-year due to wet weather impacting its crop protection business, though some key brands gained traction. The company expects recovery in H2 2025-26 and is undertaking backward integration and greenfield expansion.PI Industries, also debt-free with robust RoE (16.3%) and RoCE (21.3%), experienced a Q2FY26 drop in revenues (₹1,872.3 crore) and net profits (₹407.2 crore), attributing this to market conditions like excessive rainfall. Despite this, the company plans to commercialize numerous new molecules and possesses a strong domestic development pipeline.Atul Ltd, a large integrated chemical company, reported improved Q2 FY26 sales of ₹1,551.9 crore and net profits of ₹181.2 crore. It stands to benefit from a new five-year anti-dumping duty on liquid epoxy resins, a product it manufactures. Atul also plans debottlenecking, expanding existing product lines, and introducing new retail formulations. The article concludes by urging investors to conduct thorough due diligence, assessing fundamentals, corporate governance, and valuations before making investment decisions, as low prices might indicate transient opportunities.
