Tit - bits

The scrip of National Fertilisers Ltd (NFL) yesterday,  closed almost flat at Rs.25.55. The Budget is positive for the company as it is also into Bio Fertilizers.

If we look at the past data then we will find that in case of Chemical Fertilisers, NPK Consumption per Hectare on all India basis stood at 128.020 kg/ha in Mar 2018. This records an increase from the previous number of 123.410 kg/ha for Mar 2017. Hence,  India's chemical fertiliser demand has been on rise.

While the present requirement of urea is 320 lakh metric tonne per annum, the current production is 240 lakh metric tonne. Currently, India is importing 80 lakh metric tonne of urea -- hence there will be an import component, till 5 new plants get commissioned, when government is expecting the country to self reliant as far as urea production is concerned.  

Also, to ensure balanced use of fertiliser and reduce the consumption of urea, the NDA government has made it mandatory for all domestic and imported urea to be neem coated. That apart, the companies have been asked to sell urea in a 45-kg bag instead of 50-kg. 

Besides, the government is trying to promote judicious use of fertilisers with schemes like Soil Health Card and National Mission for Sustainable Agriculture. 

If you remember that in August,  2019, Non-urea fertiliser subsidy  was hiked to Rs.22,875 crore. In 2010, the government had launched the nutrient-based subsidy (NBS) programme. Hence,  this concept of the use of balanced fertilizers, which the FM pointed out in the budget is nothing new. 

Moreover, the downward revision in the budgetary allocation for the fertiliser subsidy for FY2020-21 (BE) to Rs.71,309 crore, as against the revised estimate of Rs.`79,998 crore for FY2019-20, will not have much negative effect for the fertiliser industry, as the amount is too small to have a major impact on the fertilizer sector. 

But, even if it did create some headwinds,  it will be in the next fiscal or FY21, hence at the present moment there is  no cause of worry. 

Chartically speaking, the scrip of NFL is in highly oversold zone (both the fast and slow oscillators), hence a bounce is expected on Monday. Above Rs.29.30, the stock is expected to gain good momentum. With an expected FY20, EPS of Rs.6/7, the stock should cross Rs.60/70 by Q1FY21. It is an investment grade share and should be accumulated in dips. 

#The stock of Yes Bank Ltd yesterday touched Rs.39.95 before closing at Rs.38.70. Profit booking was suggested with a hold on the unsold part, with a SL of Rs.37. This is no longer an investment grade counter and he be careful with your SLs.