Speculation that the government might increase subsidy for urea in the upcoming Budget has fuelled investor interest in these stocks of late.
On Wednesday, National Fertilizers,
and Ferilizers, and soared 7-16% on the BSE. The Sensex ended almost unchanged over the previous day. The mid-cap index gained 0.2% and the small-cap index rose 0.45%.
“There is buzz about the government coming out with some kind of a package for the sector in the Budget,” said Kunj Bansal, founder, Investment-illiteracy.com. “The cooling off of natural gas, a key input, has also contributed to the sentiment.”
State-owned
(FACT) hit 10% upper price circuit for the third straight session to its all-time high. While NFL is at a five-and-a-half year high, RCF is at a 15-year high. is near its all-time high.
Record high food prices and supply constraints from major exporting countries like China and Russia – in the aftermath of its invasion of Ukraine – have kept fertiliser stocks in the limelight this year.
According to Himanshu Binani, fertiliser and agro chemical analyst at Prabhudas Lilladher, the domestic fertiliser industry is well poised for structural growth driven by an emphasis towards food security in times of shortage and global supply chain upheaval.
“The domestic industry is likely to stock up imported fertilisers in Q3 (di-ammonium phosphate, nitrogen phosphorus potassium, and muriate of potash) to some extent for the next Kharif season. Going forward, one can again expect the fertiliser prices to inch up in global markets,” Binani said.
Binani said as long as the crop prices holds up both in global as well as domestic markets, the industry would be in a position to pass this on to the farmers.
Russia recently imposed a 23.5% export duty on all types of fertilisers. This will come into effect from January 1 next year.
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