Meanwhile, UPL stock has lost the most as the Street is worried that banning manufacturing can impact the company’s exports significantly
Sentiment on the Street about agrochemical manufacturers was impacted from Tuesday’s news
that the government is considering banning 27 agrochemicals. Stock prices of UPL, Coromandel International, Rallis
India and Sumitomo Chemical, that fell between two and 9.6 per cent on Tuesday, with UPL
witnessing the biggest fall. Although the stocks
have seen some rebound on Wednesday, some overhang is likely to remain.
Analysts say the chemicals being considered for ban form a significant part of the export and domestic portfolio of many players. For instance, products such as 2, 4-Dinitrophenol, Chloropyrifos Mancozeb, Acephate, and Pendimethilin are strong portfolio contributors for UPL, Sumitomo, Coromandel, Atul Ltd and Rallis.
Since the move can impact 60-70 per cent of their existing product offerings, Street concerns are bound to get aggravated. An analyst at a domestic brokerage says that as management replies and inputs are awaited, elementary assessment of the situation in his view is a negative for the entire agrochemicals pack. These insecticides have a material impact on the revenues of agrochemical companies
such as Coromandel International, Dhanuka Agritech, PI Industries, Rallis
and UPL, says Varshit Shah of Emkay Global.