Fertilisers play a vital role in India's agriculture, providing essential nutrients for crop growth and boosting yields. Due to the predominance of small-scale and rain-fed farming, soil fertility has declined in many areas, increasing the use of fertilisers in India.
India's fertiliser industry, one of its core sectors, has consistently grown since 2014, with a remarkable 9.6% increase in production in the 2023 fiscal year. India ranks among the top fertiliser consumers globally, with NPK fertilisers and urea being the most common choices.
The government has implemented economic reforms to make fertilisers more accessible for farmers to enhance food security. In this blog, let us explore the best fertiliser stocks in India:
Fertilisers & Chemicals Travancore Ltd
FACT Ltd holds the distinction of being India's first large-scale fertiliser plant, established in 1943. Located in Udyogamandal, Kochi, Kerala, FACT is primarily involved in the manufacturing and distribution of Fertilisers, by-products, and Caprolactam. It operates under the oversight of the Department of Fertilisers, Ministry of Chemicals & Fertilisers, Government of India.
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The company has exhibited robust profit growth with a 46.2% CAGR over the last five years.
Coromandel International Ltd
Coromandel International Ltd is a prominent player in the agricultural solutions sector. They offer a comprehensive range of products and services across the farming value chain. It specialises in fertilisers, crop protein, biopesticides, specialty nutrients, and organic fertilisers.
It has maintained an almost debt-free status. It has a strong profit growth record with a 23.6% CAGR over the past five years, along with a healthy dividend payout of 22.4%. The company's working capital requirements have also decreased significantly.
Chambal Fertilisers & Chemicals Ltd
The primary focus of this company is on urea production from its manufacturing facilities. They also deal in other fertilisers and agri inputs. It has a joint venture for the manufacture of phosphoric acid in Morocco.
The company has reduced its debt, maintains a good return on equity (ROE) track record, and consistently offers a healthy dividend payout of 23.0%.
Gujarat State Fertilisers & Chemicals Ltd
Gujarat State Fertilisers & Chemicals Ltd was established in 1962 and promoted by the Government of Gujarat. It engages in the manufacturing of various fertilisers, plastics, synthetic rubbers, man-made fibres, and industrial products.
The company has significantly reduced its debt and operates almost debt-free. It has a dividend yield of 4.33%. They have delivered strong profit growth at a 22.1% CAGR over the last five years.
Rashtriya Chemicals & Fertilisers Ltd
It is a PSU (Public Sector Undertaking) with 75% stake owned by the Government of India. RCF specialises in the manufacturing and marketing of Fertilisers and industrial chemicals.
The company has effectively reduced its debt and offers an attractive dividend yield of 3.41%. RCF has demonstrated remarkable profit growth, with a 63.0% CAGR over the past five years, coupled with improvements in debtor days.
Paradeep Phosphates Ltd
It was established in 1981 and stands as India's second-largest private-sector phosphatic company. The company specialises in the production, trade, distribution, and sales of various complex fertilisers.
A strong performance is expected in the upcoming quarter.
National Fertilisers Ltd
They are actively involved in the production and marketing of neem-coated urea, biofertilisers (both solid and liquid), and other allied industrial products. NFL also engages in trading activities related to imported and domestic fertilisers, compost, seeds, and various agro products.
The company has effectively reduced its debt and currently offers an attractive dividend yield of 3.36%. A strong profit growth track record with a 19.6% CAGR over the last five years is indicative of its financial stability.
Madhya Bharat Agro Products Ltd
Madhya Bharat Agro Products Ltd is a part of the Ostwal group, specialises in the manufacturing of fertiliser and chemical products.
The company has exhibited substantial profit growth, boasting an impressive 89.3% CAGR over the past five years. It has a 3-year ROE of 34.5% and consistent median sales growth of 20.4% over the last decade.
Madras fertilisers Ltd
Madras Fertilisers Limited focuses on the production of urea and complex fertilisers while also manufacturing bio fertilisers and trading eco-friendly agrochemicals, organic manure, and city compost under the brand name 'Vijay.'
The company has delivered notable profit growth, with a 43.8% CAGR over the last five years.
Southern Petrochemicals Industries Corporation Ltd
Southern Petrochemicals Industries Corporation Ltd specialises in the manufacturing and sale of urea and nitrogenous chemical fertilisers. The company offers a comprehensive product portfolio, including primary and secondary nutrients, water soluble fertilisers, organic fertilisers, non-edible deoiled cake fertilisers, and bio-pesticides.
Strong expected performance is anticipated in the upcoming quarter. They feature a 47.5% CAGR over the past five years. A 3-year ROE of 28.1% which highlights its financial stability.
In conclusion, India ranks as the world's second-largest consumer of fertilisers, with a projected increase in demand for these essential agricultural inputs in the coming years. The Indian government is actively promoting fertiliser production, extending financial assistance to both producers and farmers. It is safe to say that the industry is likely to show significant expansion and development.
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