Agri inputs, fertiliser stocks surge on hopes of strong earnings in Q3

Shares of fertiliser and agri-related companies rallied on the BSE on Thursday amid expectations of strong earnings growth in the October-December quarter (Q3FY20).

Rashtriya Chemicals & Fertilizers (RCF), Godrej Agrovet, Gujarat State Fertilizers & Chemicals (GSFC), Deepak Fertilizers & Petrochemicals Corporation, and Punjab Chemicals and Crop Protection, all rallied in the range of 6 per cent to 9 per cent on the BSE.

Also, Rallis India, Chambal Fertilisers & Chemicals, Coromandel International, PI Industries, and Dhanuka Agritech were up between 2 per cent and 4 per cent in intra-day trade today. In comparison, the S&P BSE Sensex was up 1 per cent at 41,248 points at 10:13 am.

With better acreage in Rabi 2019-20 and strong input consumption, the analysts expect domestic agrochemical and fertiliser companies to benefit.

Analyst at Emkay Global Financial Services expect agri input companies to deliver robust revenue growth in Q3 on higher rabi sowing (7 per cent yoy) and higher water availability (reservoir levels +52 per cent/+41 per cent above last year/10-year average) in the wake of good rainfall and a low base from last year.

The brokerage firm expects fertilizer companies to clock strong growth, driven by higher rabi sowing, and improved profitability due to falling raw material prices. Diammonium phosphate or DAP (+22 per cent), Nitrogen, Phosphorous and Potassium or NPK (+23 per cent) and urea (+19 per cent) saw robust volume growth in Q3.

Analysts at Motilal Oswal Securities said the consumption of agrochemicals moderated in Kharif, but the outlook for Rabi remains encouraging. Therefore, the brokerage firm expects a strong 2HFY20 (off a low base in 2HFY19) for domestic fertilizer and agrochemical players.

Among individual stocks, Godrej Agrovet today soared 8 per cent to hit a fresh 52-week high of Rs 572 on the BSE. The Godrej Group Company is a diversified, research & development focused agri- business. The stock surpassed its previous high of Rs 565 touched on April 2, 2019.

Brokerage firm Motilal Oswal Securities has maintained ‘buy’ rating on the stock with target price of Rs 584 per share. It believes the company's management is taking corrective action across its business segments to ensure the revival in growth and margins. Additionally, improvement in palm oil prices should aid improvement in the segment’s performance.

F A C T 49.15 45.10 9.0
G S F C 81.00 74.60 8.6
MANGALORE CHEM. 35.80 33.05 8.3
RAMA PHOSPHATES 52.00 48.20 7.9
ARIES AGRO 71.10 66.15 7.5
R C F 52.65 49.25 6.9
GODREJ AGROVET 560 530.75 5.51
KAVERI SEED CO. 501.95 477.85 5.04
G N F C 194.10 184.80 5.0
NATL.FERTILIZER 27.95 26.65 4.9
MADRAS FERT. 21.50 20.50 4.9
CHAMBAL FERT. 157.30 151.10 4.1
S P I C 21.45 20.70 3.6
AIMCO PESTICIDES 100.50 97.55 3.0
BHARAT AGRI 176.00 171.30 2.7
PAUSHAK 2560.00 2492.40 2.7
BHARAT RASAYAN 6100.00 5944.70 2.6
ZUARI AGRO CHEM. 127.20 124.15 2.5
RALLIS INDIA 181.00 177.05 2.2
ASTEC LIFE 476.00 467.05 1.9
DHANUKA AGRITECH 417.70 409.90 1.9
BAYER CROP SCI. 3834.50 3771.70 1.7
INSECTICID.INDIA 470.00 462.55 1.6
UPL 609.65 600.80 1.5

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