Fertiliser stocks in demand: Chambal, FACT, Aries gain up to 5%; here's why

Fertiliser stocks are in high demand today after reports said that a surge in global fertiliser prices is likely to double the fertiliser subsidy bill from the Budget estimate of ₹1.7 trillion.

Shares of fertiliser companies like Coromandel International, Chambal Fertilisers & Chemicals, Deepak Fertilisers, FACT and RCF are in high demand today after a government official said that a surge in global fertiliser prices is likely to double the fertiliser subsidy bill from the Budget estimate of ₹1.7 trillion for FY27. 

Also, the southwest monsoon, which set over Kerala on June 4, has advanced further with the weather office forecasting favourable conditions for further advance into eastern, central and western India in the next four to five days. Notably, a good monsoon directly boosts demand for fertilisers like urea, DAP, and other nutrients for kharif sowing. 

 

Individually, Chambal Fertilisers & Chemicals was the top gainer as of 11:30 AM as the counter was up 4.2 per cent at ₹474 on the National Stock Exchange (NSE). FACT and Aries Agro shares gained more than 3 per cent each to trade at ₹903 and ₹330.

 

Other counters like Coromandel International (₹1,855.70) and National Fertilizers (₹85.84) gained in the range of 2 to 3 per cent. Gujarat State Fertilizers & Chemicals and RCF shares gained 1 per cent to quote at 164.5 and 126.8, respectively. Deepak Fertilisers shares were trading flat with positive bias at ₹1,518.70.

 

Rajesh Palviya of Axis Securities said that fertiliser stocks outperformed the markets following the media reports on the fertiliser subsidy bill. He said that the overall outlook for the sector remains positive. 

 

According to a Business Standard report, a senior government official has said that fertiliser is a sensitive issue, and "we don’t see prices coming down soon". Officials from the Department of Fertilisers have already met Finance Minister Nirmala Sitharaman thrice to seek a 100 per cent increase in subsidy this year.

 

"They have highlighted that the fertiliser pool is narrowing and supplies are less,” the official said, adding that the government is trying to ramp up domestic production of fertiliser to any extent possible to reduce import dependence.

 

A 100 per cent hike would take fertiliser subsidy to a record high of ₹3.4 trillion in FY27. The previous high was ₹2.5 trillion in FY23 after the Russia-Ukraine war broke out.

 

Rajesh said that there is still room for further upside in fertiliser stocks. He said that the strategy should be to accumulate on dips.

 

"Recent announcements supporting the fertiliser sector are likely to generate additional buying interest, reinforcing our bullish view. Overall, we expect another 5–10 per cent upside across the fertiliser space," he said.

 

He said that Deepak Fertilisers continues to look attractive and recommended buying for a target range of ₹1,600–₹1,650. Apart from Deepak Fertilisers, he said that investors can also focus on Rallis India as it is showing signs of recovery from lower levels and is available at attractive valuations following its correction.

 

"A move above ₹240 could trigger fresh momentum in Rallis India, with a potential target of ₹260–₹265 in the near term," he said.

 

The analyst added that Coromandel International and FACT also look attractive. "FACT is offers a good short-term opportunity. A breakout above ₹940 could attract fresh buying interest and pave the way for further gains."   ============================================= 

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