Shares of fertilizers companies were trading higher by up to 10% on the BSE in early morning trade after the government approved a proposal to extend urea subsidy till 2020.
Rashtriya Chemicals & Fertilisers (RCF), Nagarjuna Fertilizers and Chemicals, National Fertilisers, Fertilizers & Chemicals Travancore (FACT) and Madras Fertilisers were up in the range of 5% to 8% on the BSE. On comparison, the S&P BSE Sensex was trading flat at 33,839 points at 10:20 am.
"The continuation of the urea subsidy scheme will ensure adequate quantity of urea is made available to the farmers at statutory controlled price," an official release said after the meeting of Cabinet Committee on Economic Affairs (CCEA).
The CCEA has also approved implementation of direct benefit transfer (DBT) for disbursement of fertiliser subsidy in order to reduce diversion and plug the leakages, the PTI report suggested.
The financials of 21 fertilizer companies reveals that there has been an increase in the overall sales growth and net profits of the fertilizer sector in December quarter (Q3FY18).
Sales have increased by 14.9% year on year (YoY) on account of higher realisations and an increase in production of fertilizers. The net profit has increased by 54.8% YoY due to timely disbursement of the subsidies.
“More states have been added in the Direct Benefit Transfer (DBT) purview. DBT has been rolled on a pilot basis and has helped bring down the working capital pressure faced by the players,” CARE Ratings said in Q3FY18 fertilizers sector update.