Jefferies forecasts another challenging year ahead for India's crop protection innovators in 2026, with pricing pressures expected to persist despite improving volume trends. The brokerage anticipates muted revenue growth as aggressive Chinese competition continues to weigh on market dynamics.

Growth Outlook Remains Subdued

Crop protection innovators are heading into 2026 with expectations of modest 0-2% revenue growth, according to Jefferies' latest analysis. The limited growth trajectory reflects the ongoing impact of pricing pressure, which is offsetting mid-single-digit volume growth across the sector.

Chinese crop-protection export volumes have surged 16%, maintaining downward pressure on global pricing. This aggressive supply expansion has kept prices near nine-year lows, creating challenging conditions for Indian manufacturers.

Commodity Price Recovery Shows Mixed Results

Crop prices demonstrated recovery momentum towards the end of CY25, driven by expectations of a US-China trade deal and tighter supply conditions. However, the recovery has been uneven across different commodities.

Despite some price improvements, farm input costs remain elevated, continuing to pressure farm economics and maintaining downward pressure on chemical pricing.

Refrigerant Gas Segment Provides Bright Spot

The refrigerant gas export market stands out as a rare growth driver for Indian chemical companies. India's HFC export volumes from SRF and Navin Fluorine rose 53% in the first three quarters, supported by US production cuts and increasing adoption of new-generation refrigerants.

Jefferies expects refrigerant gas prices to remain firm, supported by strong demand from both the US and China markets. This segment continues to demonstrate resilience amid broader industry challenges.

Stock Recommendations and Outlook

Navin Fluorine emerges as Jefferies' top pick, supported by broad-based growth across multiple segments including specialty chemicals, pharma CDMO, and refrigerant gas. The company's export performance has been particularly strong, with three-quarters worth of exports rising 65% annually.

PI Industries is positioned for recovery in FY27 after experiencing an earnings downgrade cycle in CY25 due to weakness in key products and regulatory delays in biologicals. With key product exports stabilizing in the second half and a soft base, new product growth should support recovery.

SRF faces limited visibility on recovery despite outperforming the Nifty by 29% in 2025. While the company benefited from stronger refrigerant gas volumes and pricing, specialty chemical exports declined 3% in the first three quarters, and refrigerant gas capacity utilization limits incremental volume growth.

Global brokerage Jefferies expects India's listed hospital chains to enter a capacity-led growth phase in CY26, with fresh bed additions beginning to meaningfully lift volumes after a muted expansion cycle over the past few years. However, the brokerage emphasizes that execution will be the key differentiator, advising investors to stay selective in their approach.

Top Picks and Growth Projections

Jefferies has named Max Healthcare and Fortis Healthcare as its preferred investment choices in the hospital sector. The brokerage projects strong earnings growth for both companies:

The brokerage has rolled forward its price targets for both companies based on these growth expectations.

Capacity Expansion Timeline

New bed additions across listed hospital chains are set to accelerate in CY26, following a relatively subdued expansion period. The expansion plans show significant scale across major players:

Medanta's next phase of expansion is still a few years away, according to Jefferies. The brokerage notes that the pace of ramp-up, including occupancy rates, margin profile, and break-even timelines, will determine near-term financial performance and stock returns.

Volume Growth Over Pricing Strategy

Jefferies identifies volume growth as the key theme for CY26, expecting it to take precedence over ARPOB (average revenue per occupied bed) expansion. As new capacity comes online, hospitals may initially prioritize occupancy, potentially accepting a softer payer mix. The brokerage expects mid-single-digit ARPOB growth at best in CY26, with lower pricing power reflecting a tougher reimbursement environment.

Brownfield expansions offer a strategic advantage, as these beds come with lower incremental costs and can offset some margin pressure even if the payer mix deteriorates temporarily. Jefferies clearly prefers brownfield-led expansion strategies:

• Max Healthcare: 67% of new beds from brownfield projects
• Fortis Healthcare: 72% of new beds from brownfield projects
• Apollo and Medanta: More greenfield-heavy approach with higher costs and 1-3 year ramp-up periods

CGHS Rate Revision Impact

The revision in CGHS rates, effective from Q3FY26, represents a positive catalyst that will become more visible in CY26 numbers. Max Healthcare is positioned as the biggest beneficiary, followed by Fortis and Medanta:

Other hospital chains are yet to fully quantify the impact of the CGHS rate revision.

Overcapacity Concerns Dismissed

Despite aggressive bed addition plans over the next five years, Jefferies does not expect an overcapacity scenario. The brokerage projects aggregate listed hospital capacity to grow at about 5% CAGR, far lower than headline announcements suggest. Operational additions are also likely to lag announced capacity due to staggered commissioning. Jefferies dismisses overcapacity concerns as a 'hospital sector paradox,' indicating confidence in the sector's ability to absorb the planned capacity additions effectively.