Fertiliser stocks surge up to 15% on healthy outlook led by several positive factors

Fertiliser stocks: On the back of a healthy outlook and several positive triggers, shares of fertiliser companies are on a roll during Wednesday’s trading session as they rally up to 15 per cent on the BSE intraday.

Individually, National Fertilisers’ shares jumped most by 15 per cent, followed by Rashtriya Chemical & Fertilisers up by over 13 per cent and Fertilisers & Chemicals Travancore (FACT) up by 10 per cent on the BSE intraday during Wednesday’s session.

Madras Fertiliser, Deepak Fertilizer, Gujarat State Fertiliser & Chemical, Khatian Fertilizer, and Mangalore Fertiliser and Chemical shares rallied between 5 and 7.5 per cent on the BSE intraday. Chambal Fertiliser shares were also up more than 3 per cent today.

The primary reason that could be attributed to the incessant rally of fertiliser stocks is the deadline for Russia’s imposition of export tax on fertiliser is nearing. Besides, the government in the Union Budget 2023 is likely to increase the subsidy on urea, which is manufactured by fertiliser companies.

Earlier, Russia had announced to set its export tax for all types of fertilisers at 23.5 per cent when the price is more than $450 a tonne, Reuters report said quoting the Interfax news agency. The imposition of the export tax is said to be effective from January 1, 2023.

Similarly, Zee Business has learned that the government may announce a rise in the subsidy on urea to provide relief to the farmers amid supply constraints due to global factors, according to the channel’s research team report. This will benefit fertiliser companies that are facing margin pressure.

Urea is used as a fertiliser and feed supplement. Besides, it is also used as a starting material for manufacturing plastics and drugs.

“We believe the domestic fertiliser industry is well poised for structural growth, led by a renewed emphasis towards food security in current times of shortage and global supply chain upheaval,” Himanshu Binani of Prabhudas Lilladher, a brokerage firm, said in a report on the sector.

The domestic agri-input industry holds immense growth potential given rising domestic demand; tighter global supply scenario from China; balanced plant nutrition through higher agri-input penetration; and continued emphasis on improving farm productivity and income, Binani added.