Top Fertilizer Stocks in India: The agriculture sector is the single largest employer in India. It accounts for 15.5% of the Gross Value Added by the country. It has grown at 3.3% and 3.0% over the last two years, directly benefitting the fertilizer industry and consequently fertilizer companies in India. 

The fertilizer industry gets benefitted from normal monsoons and improved reservoir levels, higher coverage under assured irrigation, remunerative crop prices, export focus, favorable government policies including fertilizer subsidy, and record procurement under MSP.

In this article, we will initially get a quick hang of the Indian fertilizer industry. After that, we will go through a list of the top fertilizer stocks in India. So let us begin.

Industry Overview

India is the second-largest consumer and the third-largest producer of fertilizers in the world. The sector is dominated by government and cooperatives mainly. 

Domestic production of fertilizers is only able to meet two-thirds demand of the country. Total domestic production for the recent fiscal year stood at 42 million tonnes. The balance of 17 million tons was imported.

Over the last year, domestic production increased slightly by 1% helped by Urea and Single Super Phosphate volume growth.

At the same time, 2021-22 was a tough year for the industry globally. The cost of raw materials rose sharply. Consequently, the companies increased the prices of fertilizers.

You might be knowing already that fertilizer is a subsidized commodity in India for farmers. The government took the brunt of higher prices by providing more subsidies to Indian farmers. The annual subsidy bill is projected to touch Rs. 2.15 lakh crore this year.

As for the industry growth prospects, the Indian fertilizer market is expected to register a CAGR of 11.9% during 2022-2027 according to the data from Mordor Intelligence. 

The overall effect of the Covid-19 pandemic on the industry was low. The national government took steps for the smooth flow of the commodity and exempted the sector from restrictions.

Top Fertilizer stocks in India

We now have a rough idea of the industry. Let us look at the top players in the Indian fertilizer industry.

Top Fertilizer stocks in India #1 – Coromandel International Limited

Coromandel International is India’s largest fertilizer manufacturer in terms of market capitalization and net revenue. It offers a wide range of products and services spanning the whole farming process. It manufactures and sells fertilizers, specialty nutrients, crop protection solutions, organic fertilizers, and bio-pesticides.

The company employs approximately 5,000 employees and 8,000 contract staff across its 17 manufacturing facilities and 750 retail outlets.

It is a part of the Murugappa Group. The conglomerate has business interests in various other industries including auto components, abrasives, financial services, transmission systems, cycles, sugars, farm inputs, fertilizers, and plantations.

Top Fertilizer stocks in India #2 – Chambal Fertilisers and Chemicals Limited

Chambal Fertilisers and Chemicals was founded in 1985. It is India’s leading Urea producer accounting for 13% of the total production in the country. It manufactures and sells other fertilizers along with Urea including DAP, MOP and NPK. The company offers crop protection solutions as well.

The company operates three plants and markets its products through 19 regional offices, 2800 dealers and 50,000 retailers.

It is India’s second-largest fertilizer stock as per net sales and market capitalization.

Top Fertilizer stocks in India #3 – GNFC

GNFC is a joint sector company by the Government of Gujarat and Gujarat State Fertilizers & Chemicals Limited. Gujarat Government and GSFC hold 26% and 25% respectively. GSFC again is a subsidiary of the state government of Gujarat as it holds a 37.84% stake in the company.

The company produces and markets fertilizers such as Urea and Nitrophosphate. Furthermore, it also trades various fertilizers helping its top line.

For the financial year ending March 2021, it earned its 34% of revenue (₹ 1,751 crores) from fertilizers. The balance turnover comes from its chemicals business.

Top Fertilizer stocks in India #4 – Deepak Fertilisers & Petrochemicals Corporation Limited

DFPCL is one of the leading Indian fertilizer and industrial chemicals manufacturers. It produces and sells high-quality NPK, specialty & water soluble fertilizers, and nutrients. 

It is the sole manufacturer of 24:24:0 Nitro Phosphate in India with market leadership for specialty products, solubles, and Bentonite Sulphur.

For FY21, the fertilizer business of the company accounted for more than 45% of the total revenues. 

 Top Fertilizer stocks in India #5 – Fertilisers And Chemicals Travancore Limited

FACT is a government company with the Department of Fertilizers, Ministry of Chemicals & Fertilizers holding 90% of the company. It was incorporated in 1943 in Kochi, Kerala.

It produces a variety of fertilizers including complex, straight, organic, bio fertilisers and imported. Furthermore, the by-products of the fertilizers manufacturing process are used in other industries.

It is a highly indebted company with the due interest on the loan provided by the government forming a major part of it.

Top Fertilizer stocks in India #6 – Gujarat State Fertilizers

GSFC is a public sector company owned by the Government of Gujarat. It manufactures various fertilizer and industrial products. It has 4 manufacturing plants.

The fertiliser segment accounts for roughly 77% of the company’s revenues. As for the product line, it has Urea, NPK and various Ammonium fertilizers.

The company has reduced its debt over the years. As a plus point, it has significant investments in GNFC and Gujarat Gas.

Top Fertilizer stocks in India #7 – Rashtriya Chemicals and Fertilizers

Another PSU on this list, RCF derives its 86% revenue from the fertilizer products such as Urea, bio-fertilizers, micro-nutrients, soluble fertilizers, and soil conditioners. GOI holds a 75% stake in the company.

For the financial year 2022, it reported ₹ 12,812 crores in revenues. It has two operating units and is one of the few PSUs having a history of posting profits consistently over the years.

Top Fertilizer stocks in India #8 – Rallis India

Rallis India is a subsidiary of Tata Chemicals, the chemical manufacturing arm of the salt-to-software conglomerate. Tata Group owns a 50.09% stake in Rallis India through Tata Chemicals. 

Rallis manufactures and sells insecticides, herbicides, fungicides, bio-pesticides, organic fertilizers, seeds and plant-growth nutrients.

The company exports its products to more than 80 countries. It has a strong distribution network in India with over 6,000 dealers and 70,000 retailers.

Quick Analysis of Top Fertilizer stocks in India

Company Name	Price (Rs)	Market Cap (Rs.Cr)	P/E Ratio	RoCE (%)	D/E Ratio	NPM (%)	OPM (%)	5-Yr Sales CAGR (%)	5-Yr Stock CAGR (%)	Promoter Ownership (%)
Coromandel Int	875	25,750	12.5	34.7	0.22	8.02	11.3	13.76	10.26	57.4
Chambal Fert	292	12,000	9.41	23.4	1.02	9.69	14.1	16.30	13.50	60.6
GNFC	510	8,000	4.03	33.1	0	19.7	27.6	13.50	1.43	41.2
Deepak Fert	640	8,000	655	19.8	0.68	9.0	17.7	13.05	12.83	47.58
Fert & Chem Travancore	268	17,500	26	37.7	3.78	10.0	13.5	18.84	40.47	90.00
GSFC	123	4,900	4.17	12.6	0	9.9	14.6	11.31	-1.56	37.8
Rashtriya Chem	111	6,100	6.55	15.2	0.69	4.6	7.5	12.53	4.99	75.00
Rallis India	205	3,980	26.7	13.6	0.05	6.5	10.8	13.44	-3.01	50.09

We can see that the largest players in the industry exhibit better return on capital employed and profit margins. As we come down the size ladder, the companies suffer from this or that issue.

Another interesting point we can note is smaller companies have not delivered good returns for their shareholders. 

The recent rally in chemical stocks has benefited the fertilizer companies which also produce industrial chemicals. This is visible in the growth in share prices of the companies after April 2020.

Are fertilizer stocks a good investment?

In our table above, we see how different fertilizer stocks have performed on a five-year time horizon. Their sales also rose steadily. However, the results are mixed with some companies even giving negative returns to their shareholders.

Thus, we can say that an investor can not invest blindly in fertilizer stocks or any sector. However, for steady growth of the portfolio, fertilizer stocks can be an attractive proposition. One should be on the lookout for margin expansion and rising sales when it comes to fertilizer stocks.

In Conclusion

Though it is said that agricultural production is slow-moving, nevertheless, fertilizer stocks have given good returns to their shareholders over the last 5 years. They have exhibited impressive growth with attractive return ratios.

Going forward, it will be interesting to see the performance of the sector. The stock prices in the chemical and fertilizer industries have cooled down. This also makes a good base for the next rally, if there is any.

What do you think? Let us wait to find out. Till then, keep saving and keep investing.

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