The revenue growth of Indian agrochemical stocks is expected to remain weak for the September quarter. This is primarily because the fertilizer companies had to resort to price increases to counter cost inflation. This along with weaker rain distribution impacted demand resulting in subdued volume growth.
However, analysts remain bullish on the sector. Brokerage Nirmal Bang Securities has cited international demand, easing of raw material costs and a decrease in freight rates with a better supply of containers as key catalysts.
Among chemical stocks, UPL (formerly United Phosphorus Limited) and PI Industries are two main picks of analysts.
UPL Ltd.
The Mumbai-based company is well-positioned to witness strong revenue growth in future because of price hikes and overseas growth.
UPL manufactures and markets herbicides, fungicides, insecticides, seed treatment solutions, seeds, biosolutions, and soil & water technologies. It also provides crop protection services.
Its share in the global crop production market has doubled from 4% in 2017 to 8% in 2022. The company is able to handle supply chain headwinds because of its equitable sourcing from India, non-China and China.
The shares of pesticides maker closed at Rs. 691 on Friday. Nirmal Bang’s analysts have given a price target of Rs. 1,144 for the stock. This results in an upside of almost 66% for the stock.
PI Industries
Gurgaon-headquartered PI Industries produces & sells fertilizers and speciality products. The company also provides various services such as research & development, custom synthesis & manufacturing solutions, distribution services, and more.
PI Industries earned 73% of its revenues in FY22 internationally making it another attractive bet from the point of view of global demand improvement. India only contributed Rs . 1,419 crores of the total Rs. 5,300 crore revenue for the company.
On Friday, the pesticide stock closed for Rs. 3,052 a piece. The target price of Rs. 3,979 results in an impressive upside of 30% for the investors.
Written By – Vikalp Mishra
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
