Fertiliser stocks were in focus at the bourses on Thursday, rallying up to 9 per cent on the BSE in intra-day trade, after the Centre increased its share of subsidy for di-ammonia phosphate (DAP) by 140 per cent from Rs 500 to Rs 1,200 per bag. The hike in DAP fertiliser subsidy is due to rising prices of phosphoric acid, ammonia, etc, internationally.
This would translate into reduction of market price of DAP from Rs 2,400 per bag to Rs 1,200 per bag. The cost to the government would be around Rs 14,775 crore.
In the last few months, all major fertiliser companies, including the biggest player Iffco, had hiked DAP rates along with prices of other complex fertilisers. This followed a 60 to 70 per cent rise in international prices of phosphoric acid and ammonia, which are key components for DAP.
Why Deepak Fertilisers is poised to attract investors despite govt hike in DAP fertiliser subsidy
The fertilizer segment accounted for 44% of its revenue and contributed 25% to the total operating profit in the December quarter.
Synopsis
Pune based company introduced premium priced Nitro-phosphorus-Potassium (NPK) under the brand Smartek three years ago, which became popular given its ability to improve the yield by 9-12% for crops such as cotton, sugarcane, paddy, and groundnuts.
ET Intelligence Group: The stock of Deepak Fertilisers & Petrochemicals Corporation has nearly doubled over the past three months following improving financials helped by the premium product portfolio and reduced debt burden. While the government’s latest decision to raise the subsidy on DAP fertilisers may not affect the company much given its focus on the NPK category of fertilisers, the stock may continue to attract investors given the
Shares of fertilisers companies were in focus at the bourses on Thursday, with Deepak Fertilisers & Petrochemicals Corporation, Rashtriya Chemicals & Fertilizers (RCF) and National Fertilizers rallying between 10 per cent and 18 per cent on the BSE in intra-day trade on expectation of higher demand.
Zuari Agro Chemicals, Chambal Fertilisers & Chemicals, Coromandel International, Gujarat State Fertilizers & Chemicals (GSFC) and Gujarat Narmada Valley Fertilizers & Chemicals were up 3 per cent to 5 per cent on the BSE. In comparison, the S&P BSE Sensex was up 0.81 per cent at 50,065 points, at 10:00 am.
Among individual stocks, NFL surged 18 per cent to Rs 64.05 on the back of two-fold jump in trading volumes. Earlier this month, the company said it recorded highest-ever total fertiliser sale of 5.9 million MT in 2020-21, beating its previous best of 5.70 million MT achieved during 2019-20. This includes sale of company’s own Urea, imported Urea and other P&K fertilisers.
Shares of agri-related companies, including agrochemicals and fertilisers, were in focus as demand for the procurement of fertilizers has been promising due to surplus reservoirs levels, record-high Kharif crop sowing and plentiful rainfall during the monsoon season. Among individual stocks, Fertilizers & Chemicals Travancore (FACT) and Madras Fertilizers were locked at 20 per cent upper circuit limits at Rs 76.05 and Rs 25.65, respectively. These stocks are also quoting at their 52-week high levels. That apart, Southern Petrochemicals, Zuari Global, Deepak Fertilisers & Petrochemicals Corporation and Rashtriya Chemicals & Fertilisers (RCF) from the fertilizers sector rallied up to 12 per cent on the BSE. PI Industries, UPL and Rallies India from the agrochemicals sector jumped between 4 per cent and 6 per cent on the BSE. In comparison, the S&P BSE Sensex was up 1 per cent at 48,575 at 01:14 pm.