Advantage Fertilizer Companies:

With better acreage in Rabi 2019-20 and strong

input consumption, the analysts expect domestic agrochemical and fertiliser companies to benefit.

Analyst at Emkay Global Financial Services expect agri input companies to deliver robust revenue growth in Q3FY20 on higher rabi sowing (7% Y-oY) and higher water availability (reservoir levels +52%/+41% above last year/10-year average) in the wake of good rainfall and a low base from last year.

The brokerage firm expects fertilizer companies to come out with strong growth, driven by higher rabi sowing, and improved profitability due to falling raw material prices.

According to Motilal Oswal Securities: the consumption of agrochemicals moderated in Kharif, but the outlook for Rabi remains encouraging. Therefore, the brokerage firm expects a strong 2HFY20 (off a low base in 2HFY19) for domestic fertilizer and agrochemical sector.

Also,  the Direct Benefit Transfer (DBT) of subsidies,  which the NDA government is considering at the moment, will be Positive for the Fertiliser Companies/Industry.

Last year, the government had introduced a system of giving out the fertilizer subsidy to manufacturers only after they furnished receipts of actual sales to farmers registered on point-of-sale (PoS) machines. Now the government will use the direct benefit transfer (DBT) mode to transfer the subsidy amount through e-wallets.

The Centre has budgeted ₹79,996 crore for the current financial year, towards giving out fertilizer subsidy, which includes urea and nutrient-based subsidy. In 2018-19, the subsidy outgo was ₹70,085 crore and in 2017-18 it was ₹66,467 crore.


The Reserve Bank of India (RBI)-backed National Payments Corp. of India (NPCI) is currently working on the facility of creating the e-wallet