Looking Glass

Published: Dec 29, 2021
Updated: Dec 29, 2021

Fertiliser stocks riding govt’s subsidy sop

Following up on its recent strategy to woo the farm sector, the government has hiked the total fertiliser subsidy for fiscal 2022 by Rs 14,775 crore. The government’s decision follows (a) the countrywide farmers’ stir which has caused serious concern to the government and the ruling BJP; (b) the rise in fertiliser prices in the wake of rising agricultural incomes driving demand for fertilisers worldwide. With the fast increasing prices of fertilisers adding to the woes of farmers, and in order to placate the farm sector, the government asked the fertiliser industry not to raise the prices of fertilisers which had followed a spurt in prices of raw material like concentrated phosphate, potash nitrogen and phosphorus products.

As a result of this upsurge in prices of fertiliser raw materials by leading global companies like Nutrient Ltd, Mosaic Scotts Miracle Gro and CF Industries Holdings, prices of fertiliser had already started an upward course. A leading company, Farmers Fertiliser Co-operative Ltd. (IFFCO), started the ball rolling by hiking the prices of fertilisers by 55 to 60 per cent. These include di-ammonium phosphate (DAP) and different grades of nitrogen, phosphorus and potassium (NPK) fertilisers. The Modi government insisted that farmers should get the fertilisers at the old prices and, in order to make this possible, raised the outlay of fertiliser subsidy to Rs 1.34 lakh crore from the originally planned Rs 71,309 crore. The development injected fresh blood into stocks of fertiliser players and prices of almost all fertiliser scrips, including GSFC, GNFC, Deepak Fertilisers, RCF, Chambal and National Fertilisers, have started moving up.

MONSOON EFFECT

With expectations of a satisfactory monsoon this year, the demand for fertilisers is sure to get a big boost and this, in turn, will further push up prices of fertiliser stocks.

6 Best Stocks to Buy

1) Coromondel International
2) GSFC
3) GNFC
4) Deepak Fertilisers
5) Zuari Global
6) Chambal Fertilisers