NACL stock soars 60% in 4 days on Coromandel's plan to buy majority stake

The stock price of NACL has surged 16% to Rs 107.40 in intra-day trade on Monday and zoomed 99% thus far in the month of March.

Shares of NACL Industries hit an over two-year high of ₹110.79, rallying 20 per cent on the BSE on Monday amid heavy volumes. Over the past four trading days, the pesticide and agrochemical company’s stock has soared 65 per cent after agri-solutions provider Coromandel International announced on March 12 that it had signed a definitive agreement to acquire a controlling stake in NACL. So far in March, the stock has jumped 105 per cent from ₹54 on February 28, 2024. The stock closed on Monday at its highest level since January 2, 2023.

 

The average trading volumes at the counter jumped over four-fold. A combined 17.9 million equity shares, representing 8.8 per cent of total equity of NACL changed hands on the NSE and BSE today.

 

 

Meanwhile, shares of Coromandel, Murugappa group company, gained 5 per cent to close at ₹1,889.40 on Monday. Over the past three days, the stock has risen 10 per cent. It hit a 52-week high of ₹1,977.1 on January 6.

 

NACL is an India-based crop protection company with a strong branded formulation business in domestic markets. It exports technicals to key global markets and has a presence in contract manufacturing operations with multinational agrochemical companies.

 

Coromandel is set to acquire a 5 per cent stake in NACL for ₹820 crore at ₹76.7 per share from the current promoter, KLR Products. It has also made an open offer to acquire up to 26 per cent of the equity share capital from the public under the Securities and Exchange Board of India’s Takeover Regulations. The transaction is subject to regulatory approvals and is expected to be completed over the next few months.

 

Coromandel said the acquisition would establish it as a leading player in India’s crop protection industry, expanding its technical portfolio and strengthening its domestic formulation business. The deal will also help Coromandel scale up, enter the contract manufacturing business, fast-track new product commercialisation, and expand its product lineup.

 

The management added that the acquisition would bolster Coromandel’s presence in both domestic and export markets. It plans to leverage its management expertise, credit access, sourcing capabilities, and international reach to enhance NACL’s operations and create value for shareholders.

 

According to Nuvama Wealth Management, Coromandel, India’s largest private-sector phosphatic fertiliser manufacturer, is set to benefit from the implementation of the Nutrient Based Subsidy (NBS) scheme.

 

NBS is expected to support long-term growth by reducing working capital requirements and stabilising earnings through improved raw material linkages, economies of scale, and operational efficiencies.

 

Meanwhile, India’s domestic agrochemical formulation industry consists of numerous organised players with a regional footprint. As NACL operates in generic molecules, it faces intense competition from both organised and unorganised players. The domestic agrochemical sector is heavily dependent on the monsoon and farm income levels, making revenue susceptible to seasonal fluctuations, Crisil Ratings said.

 

On February 19, Crisil downgraded its ratings on NACL’s bank loan facilities to ‘Crisil BB+/negative/CRISIL A4+’ from ‘Crisil BBB-/negative/Crisil A3’.

 

The downgrade reflects the group’s weak business performance in the third quarter of 2024-25, with a net loss of ₹36 crore for the quarter. Persistent liquidity constraints due to lender-imposed working capital restrictions and higher debt obligations are expected to continue affecting growth and financial flexibility. The negative outlook signals a further weakening in business performance over the medium term due to funding limitations imposed by banks, the rating agency said.