Finance minister Nirmala Sitharaman is all set to present her fourth Union Budget today. Given the economic disruption caused by the Covid-19 pandemic, the stock market is expecting the government to announce more supportive schemes for agriculture sector, which is one of the key pillars of the Indian economy.
With nearly half of India’s working population engaged in agriculture, the government is expected to incentivise value addition in farm sector to boost farmers’ income. In the last few years, Prime Minister Narendra Modi-led central government has continuously increased budgetary allocation towards the agri sector, which is the backbone of the Indian economy. This sector’s contribution to India’s Gross Domestic Product (GDP) has climbed from 17.6% in FY19 to 20.2% in FY21.
In the 2020-21 Union Budget, FM Sitharaman had allocated ₹1,31,531 crore to the Ministry of Agriculture. Allocation towards rural infrastructure development fund was hiked to ₹40,000 crore, while target for agricultural credit was raised to ₹16.5 lakh crore to ensure availability of higher credit to farmers.
Amid this backdrop, here are few agriculture-related stocks which may benefit from FM's Budget proposals:
UPL Ltd
With a market capitalisation of ₹60,367 crore, the largecap company has generated 37% returns in the last one year. Since the beginning of this year, the stock has risen 3%, while it 1% in the last one week.
Headquartered in Mumbai, the multinational company offers agrochemicals, industrial chemicals, chemical intermediates, and specialty chemicals, and also provides crop protection solutions. UPL, a global provider of sustainable agriculture products and solutions, had reported 36.9% growth in consolidated net profit at ₹634 crore for the second quarter ended September 2021, compared to the same period last year. Net sales rose to ₹10,567 crore in Q2 FY22, over the prior year period.
Chambal Fertilisers and Chemicals
The agrochemical company, a part of KK Birla Group, is one the largest manufacturer of urea in the private sector with an installed capacity of 1.5 million tonnes per annum. The agrochemicals manufacturing company has delivered 95% returns to its shareholders in the last one year, while it gained 50% over the past six months.
For the second quarter ended September 30, 2021, the company had posted net profit of ₹505.92 crore, up 15.8% as compared to the previous quarter ended September 2020. Sales rose 12.33% to ₹4,478.61 crore in the quarter ended September 2021 over the same period last year.
Coromandel International
Anticipating some announcement for the agri sector, shares of the chemical manufacturing company will be focus today. The company, one of the largest phosphatic fertiliser player, offers a diverse variety of products and services under brands including Shanthi Gears, BSA, Montra, and others. A part of the Murugappa Group, it is engaged in the business of fertilisers, specialty nutrients, crop protection and retail.
With a market capitalisation of ₹23,052 crore, Coromandel International has given a negative return of 7% in the past one year. The share price has tumbled 14% over the six month period, while it rose 2% in the last one month.
Godrej Agrovet
The agribusiness company, a part of the highly diversified Godrej Group, has generated a negative return of 2% over the last one year. Since the beginning of the year, the company, operating in the animal feed and agribusiness sectors, dropped 2%. The market capitalisation of the company stood at ₹9,979 crore as on January 31, 2022.
For the second quarter ended September 30, 2021, the agri-based firm reported an almost flat growth of 0.5% in consolidated profit after tax at ₹112.2 crore for the second quarter ending September 30. The company had posted a PAT of ₹111.7 crore in the same period of 2020-21. The total income of the company rose by 25.4% during the quarter under review to ₹2,159.7 crore against ₹1,722.6 crore a year ago.
Bayer CropScience
The largecap pesticides and agrochemical company has generated a negative returns of 7% over the past one year. It has fallen 10% during the last six months, while it gained 5% in one month period.
For the second quarter ended September 2021, the company reported a 31.38% decline in net profit at ₹154.1 crore, compared to ₹224.6 crore in the year ago period. Revenue from operations fell by 1.19 per cent to ₹1,365.1 crore, compared to ₹1,381.6 crore in the same quarter of the previous fiscal.
