Personal Care

Chemicals

Quarterly Newsletter
May 2023
Table of Contents

Executive summary 3

Personal care chemicals 4

Recent news 18

Recent transactions 19

Avendus specialty chemicals performance 20

2 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Executive Over the last decade, the global personal care market has
witnessed impressive historical growth, driven by factors such
summary as increased consumer spending, introduction of new products,
and a growing interest in self-care. Although the pandemic
caused supply chain disruptions and reduced demand for some
products, the industry displayed remarkable resilience and saw a
strong recovery in 2021. The industry continued its growth with
a strong momentum through 2022, despite the ongoing Ukraine-
Russia conflict, buoyed by rising demand for natural and organic
products, and higher disposable incomes in emerging markets.
This continued expansion in the personal care products market
resulted in increased demand for personal care chemicals.
This quarterly newsletter delves into how rising penetration,
greater awareness, and improved accessibility of the personal
care market is driving the personal care chemicals industry's
growth globally.

We provide an overview of the global personal care

chemicals industry — its market size, characteristics,
value chain, segmentation by nature, the types of
ingredients and application, and its competitive
landscape.

Further, we highlight the challenges faced by both Indian and

global players. To conclude, we bring you the latest news from
the industry, key transactions in India and the global specialty
chemicals sector, along with the performance of ASCI (Avendus
Specialty Chemicals Index) in Q4 FY23.

3 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Personal care chemicals market

Overview and segmentation

With a growing focus towards health and well-being, Personal care chemicals are chemicals added to
the global personal care market has experienced a personal care products to enhance the efficacy, safety,
2.7% growth between CY15 and CY19, which remained shelf-life, and sensory experience of the products.
stagnant during the pandemic period. This is expected ~70% of these chemicals are commodity while 30% are
to grow at 4.7% in the forecast period between CY21 specialty chemicals.
and CY26. Enhanced accessibility to personal care
products through e-tail stores, and the globalization
of leading personal care brands (like L'Oréal, Clinique)
also contributed to the buoyancy of the personal care
industry.

Personal care chemicals can include natural or synthetic compounds,

extracts, and formulations:

/ Natural ingredients are derived from plants, minerals,

or organic sources and tend to be gentler and have
fewer adverse effects. A few examples of natural
ingredients are jojoba oil – a hydrating agent,
chamomile – an anti-inflammatory agent, and aloe
vera – a soothing and hydrating agent.
/ Synthetic ingredients, on the other hand, are
chemical compounds created through various
chemical processes in laboratories. They are often
more effective and less expensive than natural
ingredients but might have adverse reactions.
A few examples of synthetic ingredients include
parabens, sulphates, phthalates, synthetic polymers,
and silicones.

Source: Statista Beauty & Personal Care Market

4 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Personal care chemicals market

The personal care chemicals are divided based on their application into the following categories:

Application Purpose Common ingredients

Moisturizers, humectants,
Maintain healthy skin, address blemishes, dark spots, and
Skincare emollients, antioxidants, and
counter aging
sunscreens

Improve the health and appearance of hair. They have multiple

Surfactants, dyes, styling
Haircare purposes like coloring, cleaning, detangling, smoothening,
chemicals, and conditioners
volumizing, and giving the hair a good texture

Antibacterial agents, fluorides,

Maintain oral hygiene, fresh breath, and prevent oral diseases.
Oral care desensitizing agents, abrasives,
They are used in toothpastes and mouthwash
and enzymes

Color Add color and texture to makeup products and are used in
Pigments, fillers, and binders
Cosmetics lipsticks, eyeshadows, and blushes

Based on their functionality, personal care chemicals are further classified as active and inactive:

/ Active ingredients are used in personal care and / Inactive ingredients provide physical and processable
cosmetic products to enhance their functional properties to a formulation as opposed to active
properties. They are used for purposes like properties. They are added for three major purposes:
anti-aging, exfoliation, sun protection, moisturizing, ― As a vehicle to deliver active ingredients to the
antimicrobial, skin lightening, and are used in skin skin
care products like facial and body creams, lotions,
― As a preservative to help maintain reasonable
masks, and other formulations
shelf life of the product
― To improve fine odor and appearance

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Personal care chemicals market

Active ingredients constitute 35%

35%
market share by value, compared to the
65% by inactive ingredients.

65%

  Active ingredients    Inactive ingredients

Listed below are the uses and examples of active ingredients

Classification Market Share1 (%) Examples Applications

Emollients, Humectants, and

Moisturizing agents 53 Moisturizers, Hair masks
Ceramides

Anti-aging Retinoid, Peptides, and Facial creams, face

17
ingredients Niacinamide serums, body - lotions

Zinc oxide, Titanium oxide,

UV Blockers 9 Sunscreens
Avobenzone, and Oxybenzone

Lactic acid, Glycolic acid, Citric Facial cleansers, Body

Exfoliators 6
acid, and Salicylic acid washes, scrubs

Triclosan, Benzalkonium chloride,

Anti-microbial Hand sanitizers, soaps,
6 Chlorhexidine, Tea tree oil, and
ingredients shampoos
Lavender oil

Acne treating agents like Benzoyl

peroxide, Anti-pigmentation
Face wash, skin-lightening
Others 9 agents like Kojic acid,
products
Hydroquinone, and Antioxidants
like Tocopherol

Source: 1. Indicative share based on CY19 numbers from Frost & Sullivan report

6 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Personal care chemicals market

Value chain and characteristics of Personal care chemicals market

The personal care chemicals value chain commences either in-house or through third-party distributors.
with a basic chemical supplier, who provides base FMCG companies utilize these chemicals to create the
chemicals such as petrochemicals, solvents, and fatty final products such as shampoos and soaps, which are
acids to ingredient manufacturers. The ingredient distributed via the B2B or B2C approach. The personal
manufacturers process, synthesize, and purify the care value chain is a complex system with multiple
materials to produce personal care chemicals, which processes and players, each contributing their unique
are then distributed to global FMCG manufacturers, expertise and services to enable the creation and
distribution of high-quality personal care products.

Basic chemical supplier

Petrochemicals Alkalis Solvents Fatty acids

Personal care chemicals manufacturer

Emollients Anti-aging UV blockers Hair fixative Film formers

ingredients polymers

In-house/ Third-party distributor

Supply chemical manufacturers’ product to global FMCG players

FMCG manufacturer

Haircare products Cosmetic products Nail Care products Oral Care products

B2B/B2C

Include salons, retail stores, direct consumer, pharmacies, and department stores

7 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Personal care chemicals market

Characteristics

Fragmented Shift towards sustainable/natural ingredients

The personal care chemicals market is relatively With consumers becoming increasingly conscious
fragmented, with no supplier having more than about the impact of their choices on the
10% share in the market. Given the wide variety of environment, major players are exploring natural
chemicals required by the personal care industry, and organic options to meet these demands.
it provides opportunities for companies to establish This has led to the development of eco-friendly
niche capabilities in specific chemicals and build a and sustainable chemicals such as plant-based
dominant presence globally. surfactants, natural preservatives, and emollients
derived from renewable sources.

Highly regulated
Personal care chemicals manufacturers must abide Globalized industry
by strict regulatory requirements in all countries Leading personal care brands have diversified
of operations. This is to ensure that their products manufacturing operations across the globe driven
are certified safe by meeting the regulatory by factors such as cost savings, operational
requirements governing labeling, packaging, efficiencies, and geographic expansion. This
and quality. Failure to comply with regulatory has resulted in a wider distribution of personal
requirements can result in fines, product recalls, care products, making them easily accessible to
and damage the company's reputation. consumers across regions. Hence, companies
have emerged across the globe to cater to the
requirements of personal care brands in a quicker
and more efficient way.
Constant innovation
The personal care industry is highly competitive,
with new product launches and innovations
happening frequently. To keep up with the ever-
changing consumer demands and stay ahead of the
competition, continuous and significant investments
in R&D are a must.

8 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Global personal care chemicals market

The global personal care chemicals market

was estimated to be USD ~11.5 billion in CY21

The market witnessed different growth prospects restrictions imposed due to COVID-19, before
between CY20 and CY22, depending on the sub- witnessing recovery in CY21-22. In contrast,
segments. For instance, in CY20, the demand for the demand for soaps, shampoos, and hand
ingredients such as cosmetics ingredients, hair sanitizers surged, which in turn increased
fixative polymers, and UV-protection ingredients demand for preservatives, surfactants,
declined. This was because of lower demand emollients, and conditioning polymers.
for color cosmetics, hair styling products, and
sun protection products owing to lockdown

Global personal care chemicals market size (USD bn) Indicative market share by geography (%)

CAGR:4.9% 7%
24%
CAGR:4.0% 14.6
35%
11.5
9.4
34%

  Asia Pacific     Western Europe 

  North America    Rest of the world

CY16 CY21 CY26F

As can be seen above, the Asia Pacific region
Market size (USD bn)
accounts for the highest share of the global
personal care chemicals market by value.

Note: Rossari DRHP, Cleanscience DRHP, Future market insights

9 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Key growth drivers of global personal care
chemicals market
Shifting consumer trends
Consumer trends play a major role in shaping the constantly evolving personal care industry. Major shifts in
consumer trends include:

Shift towards natural and organic products Customization

There is a growing demand for natural and organic Consumers prefer personalized products and
personal care ingredients, driven by increasing services that suit their skin and hair type, which
consumer awareness of the benefits of natural leads to creation of new formulations tailored to
products, and concerns about the environmental meet individual needs. This increases the scope for
and health risks associated with synthetic niche and specialized ingredient suppliers.
ingredients such as parabens and pthalates. The
global demand for these natural and organic
personal care and beauty products is estimated to
increase at a CAGR of 10% to reach USD 25 billion
in CY25.

Growing personal care industry

The global beauty & personal care market was pegged at USD 453 bn in CY21 and is projected to grow at a
4.7% CAGR to USD 571 billion in CY26. This growth is expected to be driven by rising disposable incomes,
premiumization of personal care products, higher awareness of health and wellness, increased spending on
personal care by men, shift in preference towards natural and organic products, and proliferation of personal
services in the personal care market.

Global personal care market (USD bn) Further, the global personal care industry is undergoing
a transformation due to the emergence of e-commerce,
which has disrupted traditional distribution channels
CAGR
and created new opportunities for industry players.
4.7%
This has led to the availability of a vast range of
products at competitive prices. The e-commerce
platforms have facilitated the entry of smaller and niche
personal care chemicals companies into new markets,
USD 571bn
USD 453bn enabling them to reach a wider customer base beyond
their traditional geographic boundaries.

CY21 CY26

Source: Cleanscience DRHP, Statista

10 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

India personal care chemicals market

Personal care chemicals market in India grew from in turn prompted personal care chemicals players to
USD 1.1 bn in FY20 to USD 1.6 bn in FY22 at a CAGR adjust their own prices. The market is expected to grow
of 20%, fuelled by strong demand from end-user at around 15% CAGR during FY22-27 and be come a
industries and also partly due to the increasing raw USD 3.2 bn market in FY27.
material prices owing to supply chain disruptions which

India personal care chemicals market size (USD bn) India personal care chemicals market by
nature of ingredients
15.0%
CAGR
20.5%
CAGR
1.8 39% 61%

1.0
1.4
0.7
0.6
0.4   Active ingredients    Inactive ingredients
FY20 FY22 FY27
Active ingredients made up approximately 39% of
  Active Ingredients    Inactive Ingredients 
the personal care chemicals market in India and are
likely to command a higher share going forward, with
consumers becoming more knowledgeable about
the ingredients used in personal care products, and
increasing demand for premium products. In India,
there is a discernible trend of consumers opting for
higher-end, luxury products that incorporate more
valuable active ingredients, which is driving growth.
This growth is being further propelled by various
factors, such as rising disposable incomes, growing
young workforce, and the expansion of organized retail.

Source: Avendus Analysis

11 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Key growth drivers of the personal care chemicals
industry in India

Emergence of middle-class population Enhanced accessibility driving higher adoption

According to a recent survey conducted by PRICE1, in rural markets
the proportion of middle-class households in India– The emergence of various sales avenues for
defined as those earning an annual household personal care products, ranging from general
income of INR 5-30 lakh – has seen a surge from e-commerce websites like Amazon and Flipkart, to
14% between 2004 and 2007, to 31% in recent exclusive personal care e-tail platforms like Nykaa
times. The survey further projects that this and Purplle, has bolstered consumer awareness and
percentage is anticipated to climb to 63% by 2047. improved accessibility, and helped FMCG brands
This burgeoning middle class has spurred an uptick reach the previously untapped population. This
in personal care expenditure, which will drive the trend is expected to have a significant impact on the
growth of personal care chemicals market in India. penetration of personal care products, particularly
in rural areas with a high growth potential.

Growing demand for premium personal care

products
The consumption of luxury and high-end personal
care products is on the rise, and this trend is being
driven by a growing proportion of young consumers
with higher spending potential, as well as the
growth of organized retail.
As a result, there is an increasing demand for high-
end discretionary products, which is fuelling the
need for high value specialized active ingredients.

Source: 1. People Research on India’s Consumer Economy

12 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Competitive landscape: Global and Indian personal
care chemicals market
The global personal care chemicals market is a largely fragmented market with no player having 10%+
market share globally. Given below is a list of top personal care chemicals suppliers across each of the major
subcategories and their aggregated market share in that category.

Top suppliers of personal care chemicals by volume and ingredient category

Category Top Leading Suppliers Aggregated market share

(%)

Antimicrobials 33
        

Conditioning
57
Polymers      

Emollients 39
           

Surfactants 35
        

UV Protection
56
Ingredients         

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Competitive landscape: Global and Indian personal care chemicals market

The personal care chemicals market in India is characterized by a healthy competition between diversified
chemicals MNCs such as BASF, Croda, Clariant, etc. and niche domestic players such as Galaxy Surfactants,
Kumar Organics, etc.

Company Name Products FY22 FY19-22 FY20- FY20-22 Synthetic

Revenue Revenue 22 Avg. Avg. RoCE vs Natural
(INR mn) CAGR EBITDA (%) ingredients
Conditioning agents, Pearlizing
agents, Surfactants, and 36,857 10.1% 13.7% 22.8%
Preservatives

Oleochemicals such as fatty

alcohols, fatty acids, and 14,1671 19.1% 8.0%2 NM
(Oleochemicals) glycerine

Ionic surfactants, Polythelene

6,653 33.5% 9.4% 15.0%
glycols, and Polysorbates

Skin-brightening agents,
Anionic surfactants, and 6,3011 3.0% 20.9% 34.1%
Botanicals

UV filters, Antidandruff, and

5,681 17.8% 20.1% 61.6%
Anti-bacterial agents

Antibacterial ingredients,
Emollients, Skin-lightening
4,269 12.6% 13.7% 27.3%
ingredients, and Preservative
ingredients

Persulfates 4,655 12.8% 17.6% 45.6%

Sunscreen chemicals,
preservatives, and salicylic acid 2,651 22.4% 10.2% 20.5%
& para-hydroxy benzoic acid

Standardized and custom

1,165 21.4% 37.2% 60.1%
developed esters

Anti-aging ingredients,
Antioxidants, and Sun 1,1003 29.6% 31.3% 46.4%
protection agents

Natural Synthetic

Source: Annual Reports, PrivateCircle, CIQ;

Note: 1. FY22 Revenue and FY19-22 Revenue CAGR are specific to the Personal care chemicals Business, whereas other financial ratios are specific to entity's standalone / consolidated financial
statements;
2. FY21-22 Avg. EBITDA (%);
3. FY21 Revenue, FY18-21 Revenue CAGR, FY19-21 Avg. EBITDA (%) and Avg. RoCE

14 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Challenges for personal care chemicals
manufacturers

/ Complex and evolving regulatory environment / Transitioning to a sustainable value chain

 ersonal care products are governed by a range of
P Companies in the personal care industry are under
regulations that pertain to safety, environmental significant pressure to identify more sustainable
impact, and labeling requirements. The regulatory and environmental-friendly substitutes, such as
constraints imposed on product manufacturers plant-based or biodegradable ingredients.
necessitate that manufacturers either innovate or
Personal care products are a daily essential for
reformulate their ingredient production processes to
many customers. However, the chemicals utilized in
align with the updated norms and regulations. A case
these products have come under increased scrutiny
in point is the recent ban on rinse-off personal care
owing to concerns surrounding potential health risks.
products containing microbeads by the Australian
Research studies have established links between
EPA, which took effect on November 1, 2022.
specific personal care chemicals and various health
As regulatory frameworks can exhibit variations risks such as skin irritation, hormone disruption, and
across geographies and undergo continuous even cancer. For example, parabens, a commonly
evolution, it is necessary that ingredient used preservative in personal care products, have
manufacturers stay up to date with recent been observed to mimic estrogen in the human body,
regulations. Adherence to these regulations and is linked to breast cancer. Similarly, phthalates,
can entail considerable investments of time and which are added to fragrances to increase their
resources in areas such as testing, certification, longevity, have been linked to reproductive and
and documentation. Successful compliance is developmental problems. Consequently, there is an
critical to ensure product quality and safety, build expanding market demand for safer and more natural
consumer trust, and meet market standards. personal care products that circumvent the use of
Lagging on compliance poses a risk to the potentially hazardous chemicals.
manufacturer’s reputation and will be challenging
The consumer pressure on product manufacturers to
to regain in a highly competitive active ingredients
switch to eco-friendly alternatives puts the onus on
manufacturing market.
personal care chemicals manufacturers to pivot to
the production of such alternatives, or stand the risk
of losing their B2B customer base.

15 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Challenges for personal care chemicals manufacturers

/ Highly competitive market with changing / Margin squeeze due to cost pressures
consumer preferences Personal care chemicals manufacturers rely on
Consumer preferences and expectations are many petrochemical sources as their raw materials.
undergoing constant transformation, evolving at an For instance, mineral oils are used in personal care
unprecedented pace. To remain in sync with these products such as lotions, creams, and lip balms.
developments, product manufacturers reformulate
Therefore, the margins are sandwiched between
a significant proportion of their products (typically
the price locked by a highly competitive market and
25-30% of their portfolio) and introduce nearly 80
the costs driven by commodity prices, logistics,
new active ingredients every year. Keeping pace
and conversion. Hence, cost pressures are a major
with this accelerated rate of change is crucial for
challenge to players in the personal care chemicals
manufacturers to retain their competitive edge in the
market.
fragmented market.
In essence, this implies that a manufacturer must
develop a diverse range of formulations to effectively
cater to the varied individual needs of customers
worldwide.

16 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Road ahead for the Indian personal
care chemicals market
The outlook for the personal care chemicals market in India d) Implement advanced manufacturing technologies and
is extremely positive. The market is expected to continue upgrade or modify equipment on a regular basis, etc.
its strong growth momentum driven by factors such as to not only ensure cost competitiveness in a highly
rising disposable incomes and higher willingness to spend competitive industry, but also to ensure compliance with
on personal care and beauty products, changing consumer regulatory requirements as personal care products are
preferences in favour of natural and organic products, and highly regulated
emergence of e-commerce platforms that have resulted in
e) With countries across the globe setting aggressive net
higher market penetration. We believe that players in the
zero targets, it becomes imperative for companies to
personal care chemicals market in India should capitalize
embrace sustainability across the entire spectrum of
on these tailwinds and focus on the following points to
business operations. Strong ESG practices will be a
strengthen their position further in the market –
critical factor for MNCs to choose the right supply chain
a) Given the dynamic consumer preferences and partners, especially in India
stringent regulatory requirements, extensive focus
f) Leverage on macro tailwinds and changing geopolitical
on R&D and new product development is a must to
landscape globally to expand into exports to cater to the
sustain competitive advantage and stay ahead of the
global markets
competition
b) Partner with customers in their new product
development initiatives to ensure high customer
stickiness
c) Diversify product offerings into natural and organic
ingredients as demand for natural and organic products
continues to increase steeply. Currently, a large number
of scaled up players in India are focused on synthetic
ingredients

17 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Recent news from Indian specialty chemicals
industry
Croda India to invest MAR 30, 2023
INR 5,000 mn in Dahej The Company has set up a new facility at Dahej, which will increase its capacity to serve
greenfield facility the rising regional consumption of consumer care products, and growing opportunities in
pharma and cropcare

Evonik Catalysts ramp ups MAR 29, 2023

capacity of nickel catalysts in The Company announced debottlenecking projects to increase capacity for KALCAT and
Germany and India Metalyst brands by 25% at its production sites in Germany and India. The new capacity is
expected to be available in the second half of 2024

Aether Industries to invest MAR 23, 2023

INR 10,000 mn on setting up The Company signed an MoU with the Government of Gujarat for setting up a new
new manufacturing plant manufacturing plant at its Panoli site. It aims to commission the plant by 2025

Anupam Rasayan invests MAR 22, 2023

INR 6,700 mn for setting The Company has signed an MoU with the Government of Gujarat for setting up new
up manufacturing units in plants at Surat and Bharuch in Gujarat, and plans to commission the plants by 2025
Gujarat

Navin Fluorine Advanced MAR 18, 2023

Sciences approves capex of The Company has approved a capex of INR 4,500 mn for setting up a new 40,000 MTPA
INR 4,500 mn hydrofluoric acid capacity at Dahej. The project will be funded through a mix of internal
accruals and debt

Vishnu Chemicals to invest MAR 01, 2023

INR 10,000 mn to set The Company plans to invest Rs 10,000 mn for development of greenfield projects in
up integrated specialty Gujarat and Andhra Pradesh by setting up integrated specialty chemicals plant over the
next five years
chemicals plant

SRF approves three Dahej JAN 31, 2023

projects at an estimated The Board has approved three projects in Dahej: A range of specialty fluoropolymers at
capex of INR 7,450 mn a cost of INR 5,950 mn, to be commissioned in 24 months; a new dedicated facility to
produce an agrochemical intermediate, at a cost of INR 1,100 mn to be commissioned in
10 months; and a structure for a new plant building at a projected cost of INR 400 mn

Meghmani Organics JAN 24, 2023

commissions Titanium Dioxide The Company announced commissioning of Phase 1 of Titanium Dioxide (TiO2) plant at
plant Dahej with an installed capacity of 16,500 MTPA. It plans to double its capacity to 33,000
MTPA by Q3FY24

Safex Chemicals to invest INR JAN 04, 2023

1,000 mn over three years The Company plans to invest INR 1,000 mn across three years under their new arm
AgCare Technologies. The company is aiming to grow over 14% organically and close to
56% inorganically

18 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Recent transactions in specialty
chemicals industry
Date Target Company Target Target Segment Acquirer Deal Value LFY EV /
Country (USD mn) EBITDA

Mar-23 MBCC Admixtures Germany Construction Chemicals Cinven 813 10.0x1

Partners

Mar-23 Univar USA Chemicals Distribution Apollo, ADIA 8,170 7.8x

Mar-23 Giovanni Bozzetto Italy Chemical Auxiliaries Aimia 241 7.0x

Feb-23 IFF (Flavor Specialty USA F&F Exponent 220 NA

Ingredients Business) Private Equity

Feb-23 Ciech Group (49% stake) Poland Diversified Kulczyk 312 5.9x
Investments

Feb-23 Fuso Chemical (6% stake) Japan Lifescience & Electronic Kunpusha 58 5.7x
Chemicals

Feb-23 Thai Central Chemical (17% Thailand Agrochemicals Sojitz 115 14.4x
stake)

Feb-23 ICP Industrial Solutions USA Performance Coatings Wendel 205 NA

Group

Feb-23 Solus Biotech South Korea Personal Care & Pharma Croda 279 NA

Jan-23 Lotte Chemical Pakistan Pakistan Commodity Chemicals Lucky Core 156 4.1x
(75% Stake) Industries

Jan-23 Hasa USA Water Treatment Wind Point 380 6.3x

Chemicals Partners

Source: Mergermarket, News articles

Note: 1. Based on INEOS's bid for the business given Cinven Partners' bid was not significantly different from value bidded by INEOS. The INEOS - MBCC Admix deal, however, could not be closed.

19 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

ASCI significantly outperforms broader markets

Performance of Avendus Specialty Chemicals Index (ASCI) vis-à-vis

Sensex and Manufacturing index
% returns 3-yr 1-yr 6-months 3-months
Spec Chem 175% (15%) (14%) (8%)
Sensex 100% 1% 3% (4%)
Manufacturing 104% 2% 2% (3%)
400

350

300

274.9
250

204.4
200
202.2

150

100

50

0
Nov-21
Mar-20

May-20

Jul-20

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

Sep-21

Jan-22

Mar-22

May-22

Jul-22

Sep-22

Nov-22

Jan-23

Mar-23

Avendus Spec Chem Index (ASCI)  Sensex  Manufacturing

The ASCI consists of Indian players from agrochemicals, dyes & pigments, life sciences, flavors and fragrances,
and diversified chemicals, among others. ASCI has outperformed the market in the long term, but underperformed
over the last year.
However, we believe that ASCI will rebound and continue to outperform the broader market over the medium to
long-term owing to the likely recovery of the global economy the second half of 2023.
Source: CapIQ as of March, 2023; Note: Specialty chemicals index is a market cap weighted index of top 25 specialty companies by market cap. The rebalancing of the weights
of the constituents is done every quarter. Manufacturing index represents top 28 listed manufacturing companies

20 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Valuation metrics

Company Name Segment M.Cap LTM LTM 3 Yr. 3 Yr. NTM EV/ NTM PE
(INR bn) Revenue EBITDA Sales Avg. EBITDA
(INR bn) (%) CAGR RoCE

Diversified
18.7x 30.1x
SRF Specialty 713 146 24.6% 20.5% 17.4%
18.6x 30.7x
Chemicals

6.9x 10.0x
UPL Agrochemicals 538 529 20.5% 28.4% 13.2%
7.7x 12.0x

24.3x 33.3x
PI Industries Agrochemicals 459 63 23.5% 23.1% 21.6%
29.2x 42.0x

Diversified 15.4x 23.5x

Deepak Nitrite 251 79 17.7% 36.1% 38.6%
Chemicals 15.6x 24.1x

Sumitomo 25.2x 35.7x

Agrochemicals 213 35 19.0% 11.2% 32.5%
Chemical India 31.0x 44.0x

Diversified
Navin Fluorine 31.3x 45.6x
Specialty 211 18 24.1% 13.4% 21.8%
International 36.0x 51.2x
Chemicals

Diversified
19.4x 29.9x
Atul Specialty 205 56 16.2% 8.0% 21.2%
20.6x 31.2x
Chemicals

Diversified
17.0x 29.4x
Aarti Industries Specialty 188 73 17.8% 18.9% 16.4%
20.6x 34.6x
Chemicals

Diversified
25.8x 30.9x
Vinati Organics Specialty 186 21 28.0% 12.7% 24.7%
31.6x 38.7x
Chemicals

Bayer 17.4x 24.3x

Agrochemicals 182 51 17.3% 14.2% 43.7%
CropScience 24.2x 33.0x

Diversified
Clean Science and 27.9x 39.3x
Specialty 135 9 41.0% 20.3% 80.1%
Technology 48.1x 64.9x
Chemicals

Fine Organic Specialty 20.0x 27.2x

132 30 25.6% 21.0% 38.3%
Industries Additives 30.2x 43.6x

Alkyl Amines 26.2x 38.6x

Life Sciences 110 17 19.7% 22.2% 43.4%
Chemicals 26.8x 39.4x

Current 3yr average

Source: CIQ as at 31st March, 2023

21 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Valuation metrics

Company Name Segment M.Cap LTM LTM 3 Yr. 3 Yr. NTM EV/ NTM PE
(INR bn) Revenue EBITDA Sales Avg. EBITDA
(INR bn) (%) CAGR RoCE

Diversified
10.5x 17.4x
BASF India Specialty 99 138 5.5% 29.5% 23.8%
16.2x 38.9x
Chemicals

Galaxy Personal Care 16.2x 23.1x

83 45 12.4% 10.1% 22.9%
Surfactants Chemicals 19.9x 30.3x

7.4x 11.9x
Balaji Amines Life Sciences 63 27 26.9% 34.9% 31.9%
15.5x 23.5x

5.1x 11.1x
Sharda Cropchem Agrochemicals 44 40 19.5% 21.5% 20.0%
5.6x 12.3x

Privi Speciality Flavours & 28.8x 62.1x

41 16 11.2% 1.5% 11.4%
Chemicals1 Fragrances 23.7x 41.2x

17.1x 23.7x
Bharat Rasayan1 Agrochemicals 38 14 16.6% 9.5% 31.5%
19.1x 28.0x

10.5x 17.9x
Rallis India Agrochemicals 38 30 7.4% 9.5% 14.9%
13.2x 21.3x

Personal Care 11.1x 19.6x

Rossari Biotech 33 17 13.0% 42.2% 35.9%
Chemicals 25.5x 44.5x

8.8x 11.6x
Dhanuka Agritech Agrochemicals 28 16 15.8% 13.7% 27.0%
12.2x 16.3x

Sudarshan Dyes & 13.4x 32.5x

27 22 9.3% 11.4% 14.3%
Chemical Pigments 12.9x 23.9x

Other
Advanced Enzyme 14.2x 24.7x
Specialty 26 5 28.1% 7.8% 21.2%
Technologies 14.2x 23.9x
Chemicals

Oriental Flavours & 20.9x 40.8x

12 9 7.4% 4.8% 17.9%
Aromatics1 Fragrances 17.3x 28.1x

Current 3yr average

Source: CIQ as at 31st March, 2023

Note: 1. LTM EV/EBITDA and LTM P/E multiples

22 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Contact

Koushik Bhattacharyya Managing Director

E-mail : koushik.b@avendus.com
Mob : +91 99676 06839

Salil Jain Director

E-mail: salil.jain@avendus.com
Mob : + 91 97697 20450

Ashish Gupta Associate Vice President

E-mail : ashish.gupta@avendus.com
Mob : +91 88797 12057

Arjav Gabani Associate

E-mail : arjav.gabani@avendus.com
Mob : +91 98194 30092

Aishwarya Kuzhikkat Associate

E-mail : aishwarya.kuzhikkat@avendus.com
Mob : +91 89769 21154

23 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

Disclaimer

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24 Personal Care Chemicals | Quarterly Newsletter | Q4FY23

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25 Personal Care Chemicals | Quarterly Newsletter | Q4FY23