New Delhi, Aug. 19 -- Profit gains made by several Indian chemical companies in the first quarter due to higher prices are likely to weaken in the second quarter as companies shift to costlier raw materials, while weaker demand remains a key concern, Kotak Institutional Equities said in a report.

The brokerage said most chemical companies are likely to have used up their low-cost inventories during the first quarter and would now need to buy raw materials at higher prices. This could put pressure on margins in 2QFY27.

However, supply disruptions linked to the Middle East may keep prices and margins higher than normal in some chemical segments, including phenol, for some time, it said.

The report noted a stronger-than-expected first qua...