India's agrochemical industry is expected to witness a subdued start to the financial year, with companies likely to post modest earnings growth in the first quarter of FY27. However, firms with a strong export presence are projected to perform better than those primarily serving the domestic market, according to a report by brokerage firm Anand Rathi.

The report estimates that the sector's revenue will increase by around 3% year-on-year during the April-June quarter, while EBITDA is expected to decline by roughly 3% compared to the same period last year. The muted performance has been largely attributed to the delayed arrival of the monsoon, which slowed sowing activities across several agricultural regions. As planting schedules were pushed back, demand for agrochemical products also shifted, resulting in a significant portion of sales moving into the second quarter of FY27.

Anand Rathi noted that agrochemical manufacturers had raised prices between March and May 2026 to offset rising raw material costs caused by geopolitical tensions in West Asia. However, these price increases were later withdrawn as demand remained weaker than anticipated. The report also pointed out that an early shift in crop cultivation toward cotton, soybean, and pulses affected product demand, based on feedback gathered through the brokerage's channel checks.

Despite the weak quarterly outlook, the report suggests that market conditions could improve in the coming months. Lower carryover inventories from the previous season are expected to create room for fresh stocking across the distribution network. At the same time, favourable Minimum Support Prices (MSPs) and healthy farm economics are likely to encourage farmers to increase spending on agricultural inputs, supporting overall demand. The brokerage emphasized that the distribution of rainfall during July and August will be a crucial factor in determining crop development and the pace at which existing inventories are cleared. A well-distributed monsoon could help improve sales momentum during the remainder of the season.

Export-oriented agrochemical companies are expected to remain in a stronger position than their domestic counterparts. The report cited improving demand from key international markets, including Europe, North America, and Latin America, as a major growth driver. These companies are also expected to benefit from calibrated price increases aimed at offsetting higher raw material and logistics costs.

Currency movements are likely to provide an additional advantage for exporters. According to the report, the US dollar has appreciated by around 12% against the Indian rupee over the past year, while the euro has strengthened by approximately 14%, creating a more favourable environment for export earnings.

Looking beyond the agrochemical industry, Anand Rathi believes several sectors could deliver healthy growth in the first quarter of FY27 despite uncertainties stemming from the ongoing geopolitical situation in West Asia. However, it cautioned that rising input costs may continue to pressure profit margins in certain industries. While India's agrochemical sector is expected to post a relatively weak first-quarter performance, improving agricultural conditions, lower inventory levels, stronger global demand, and supportive currency trends could help the industry regain momentum in the quarters ahead.