Agrochemicals are chemical products used in agriculture to protect crops from pests and diseases, improve crop yields, and enhance soil fertility. They include a wide range of substances such as pesticides, herbicides, fungicides, fertilizers, and plant-growth hormones.
These products are essential for modern agriculture, as they help farmers manage pests and diseases effectively, increase crop yields, and improve soil health.
Furthermore, the monsoon season is expected to positively impact AgroChemical stocks by increasing the demand for pesticides and herbicides due to the need for effective pest management in good crop yields. Additionally, good monsoon conditions lead to higher agricultural productivity, driving demand for fertilizers and seeds.
Listed below are such agrochemical stocks whose PE is less than the industry:
Dhanuka Agritech Ltd
With a market capitalization of Rs. 7,307 crores, the shares of Dhanuka Agritech started Friday’s trading session on a higher note at Rs. 1,621.85 compared to its previous close of Rs. 1,613.30. During the trading session, the shares hit a low of Rs. 1,555.05, losing around 2 percent and closed the day at Rs. 1,580 apiece.
Looking at the company’s financial performance, the revenue decreased by around 6 percent from Rs. 403 crores during the December quarter to Rs. 368 crores in the March quarter. On a contrasting note, the net profits increased by 31 percent from Rs. 45 crores to Rs. 59 crores during the same period.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 19.03 percent and a return on capital employed (RoCE) of 24.73 percent for the period spanning FY23-24. Moreover, the stock might be deemed undervalued, given its PE ratio of 30.6 times, in contrast to the industry average of 41.8 times.
The company generates revenue from various segments, with its primary source being insecticides, contributing 44 percent of the total revenue. Fungicides account for 16 percent of revenue inflows, while the remaining 40 percent comes from herbicides and other segments.
P I Industries Ltd
With a market capitalization of Rs. 55,269 crores, the shares of P I Industries started Friday’s trading session on a flatter note at Rs. 3,638.20. During the trading session, the shares hit a low of Rs. 3,625.10, losing around 1 percent and closed the day at Rs. 3,639 apiece.
Coming onto the company’s financial statements, the revenue decreased by 8 percent from Rs. 1,898 crores during the December quarter to Rs. 1,741 crores in the March quarter. On the other hand, the net profits declined by 18 percent from Rs. 449 crores to Rs. 370 crores during the same timeframe.
Due to increasing operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 17.07 percent during FY 22-23 to 19.25 percent in FY 23-24, and, the return on capital employed (RoCE) zoomed from 20.20 percent to 21.14 percent during the same period. Additionally, the share can be considered to be undervalued as the PE ratio stands at 32.9 times compared to the industry average of 41.8 times.
The company has a strong pipeline of biologicals and bio-stimulants at various stages of development. It is focusing on expanding its product offerings beyond agrochemicals, with a goal of generating around 25 percent of its revenue from non-agrochemical industries in the next 4-5 years.
Coromandel International Ltd
With a market capitalization of Rs. 44,222 crores, the shares of Coromandel International started Friday’s trading session on a lower note at Rs. 1,493 compared to its previous close of Rs. 1,498.35. During the trading session, the shares hit a high of Rs. 1,518.20, gaining around 2 percent, also recorded as the company’s fresh 52-week high and closed the day at Rs. 1,508.80 apiece.
Looking at the company’s financial statements, the revenue decreased by 28 percent from Rs. 5,464.15 crores during the December quarter to Rs. 3,912.72 crores in the March quarter. In addition, the net profits also declined by 28 percent from Rs. 228.11 crores to Rs. 163.91 crores during the same period.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 17.43 percent and a return on capital employed (RoCE) of 24.04 percent for the period spanning FY23-24. Moreover, the stock might be deemed undervalued, given its PE ratio of 26.9 times, in contrast to the industry average of 41.8 times.
Recently, the company unveiled a state-of-the-art Nano Fertiliser plant at its Kakinada complex in Andhra Pradesh. Coromandel’s Kakinada unit produces a wide range of NPK grades with an annual capacity of 2 million MT of fertilisers and caters to the needs of farming communities across India.
Moreover, the company intends to introduce novel molecules via captive and in-licensing arrangements. Concurrently, it aims to broaden its retail store presence in emerging markets. Further, the company aims to improve its operational efficiency by increasing fertilizer plant capacity and backward integration capabilities.
Written By Vaibhav Patil
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