Rabi Fertilizer & Agrochemicals to remain strong despite base of last year

The outlook for the ongoing rabi season remains encouraging, with fertilizer and agrochemical players likely to report healthy performances in 2HFY21, Motilal Oswal Institutional Equities has said in a report. 

"Farm income was impacted in some states, mainly due to lower yield on account of untimely rains. Nevertheless, volumes in Fertilizer (15% growth in industry volumes in 1HFY21) and Agrochemicals (agrochemical companies' aggregate domestic revenue was up 15% in 1HFY21) increased strongly on the back of a good monsoon season," the report states.   

According to Motilal Oswal Institutional Equities, as per its interaction with industry players, in the ongoing rabi season as well, fertilizer and agrochemical sales are likely to be better on the back of higher moisture content in the soil and higher reservoir levels - this is despite the high base of last year. 

"Acreage in the ongoing rabi season is up 4% YoY (as of 11th Dec'20), and Oct and Nov'20 Fertilizer industry sales volumes have seen growth of 10% YoY. Thus, the outlook for the ongoing rabi season remains encouraging; fertilizer and agrochemical players are also likely to report healthy performances in 2HFY21. In the Fertilizer space, we assign a Buy rating to Coromandel; in the Agrochemicals space, we assign a Buy rating to PI Industries and Neutral rating to UPL," Motilal Oswal Institutional Equities has said in its report.