Shares of Fertilisers And Chemicals Travancore Ltd (FACT) zoomed 8.76% on Thursday’s early trades to reach a fresh 52-week high of ₹ 409.75 per share on the National Stock Exchange (NSE). At 12:29 PM, its shares were trading at ₹ 398.40 apiece, up 5.75%.
FACT is the first large-scale fertiliser plant in India. It is engaged in the manufacturing and selling of fertilisers, its by-products and Caprolactam. The company works under the aegis of the Department of Fertilisers, Ministry of Chemicals & Fertilisers, Government of India.
Most fertiliser companies were in the green following the news that the Cabinet is likely to adopt the PM PRANAM SCHEME (Promotion of Alternate Nutrients for Agriculture Management Yojana). Its main objective is to encourage the balanced use of fertilisers in conjunction with biofertilizers and organic fertilisers.
According to media reports, the government would focus on lowering subsidies for chemical fertilisers through this scheme. The subsidy burden on chemical fertilisers is estimated to reach ₹ 2.25 lakh crores in 2022-23, 39% higher than the 2021 figure of Rs 1.62 lakh crore. This scheme will have no separate budget and will be financed through the savings of existing fertiliser subsidies.
Moreover, shares of Fertilizer stocks have been in focus, following last week’s monsoon report from the India Meteorological Department (IMD), which forecast a typical southwest monsoon.
Analysts say that the fertiliser industry in India experienced record completions in terms of investment value and capacity in the past year. It added a total of 3,260.8 thousand tonnes of conventional granular fertiliser manufacturing capacity and 73,000 litres of liquid fertiliser capacity.
Moreover, the industry is expected to grow with an additional 1,864.4 thousand tonnes of capacity planned for the next two financial years, bringing the total installed manufacturing capacity to 58.4 million tonnes by 2024-25.
Most fertiliser manufacturers were operating above 90% capacity in 2020-21, therefore significant capacity additions are unlikely to have an adverse impact. Analysts believe that increased production from new capacities is expected to reduce the need for expensive fertiliser imports, potentially lowering the import share by one to two percentage points.
Fertilisers & Chemicals Travancore Ltd (FACT), incorporated in the year 1943, is the first large-scale fertiliser plant in India at Udyogamandal, Kochi, Kerala. The company is engaged in the manufacturing and selling of fertilisers, its by-products and Caprolactam. It is under the administrative control of the Department of Fertilisers, Ministry of Chemicals & Fertilisers, Government of India.
FACT is a mid-cap company with a market capitalization of ₹ 24,378 crores. It has a high return on equity of 63.33%, but a high debt-to-equity ratio of 1.45. The company’s shares
were trading at a price-to-earnings (P/E) ratio of 39.78, which is higher than the industry average of 15.26, indicating that it might be overvalued as compared to its peers.
In the past year, the company’s share price increased from ₹ 112.40 apiece to the current level, delivering multibagger returns of 254.45%. Thus, if an investor had invested ₹ 1 lakh in the company’s shares a year ago, the value of their holdings would have been 3.54 lakhs today!
Written by Simran Bafna
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