6 Fertiliser Stocks Likely to Benefit as Subsidy Set to Rise Amid Global Price Surge

Synopsis: India’s fertiliser subsidy is set to rise nearly 20% amid surging global prices and record urea imports, driven by supply disruptions. This trend may benefit domestic fertiliser companies through higher demand, improved pricing, and stronger subsidy support.

India’s fertiliser sector is witnessing renewed momentum as global prices surge due to geopolitical tensions, particularly in the Middle East. Rising input costs and supply disruptions have pushed import prices significantly higher, impacting overall market dynamics.

At the same time, increased import volumes and seasonal demand ahead of the sowing cycle are expected to tighten supply further. This is likely to elevate the government’s subsidy burden while supporting domestic manufacturers through stronger demand and stable pricing support.

Fertiliser Subsidy Set to Rise

India is expected to see a nearly 20% increase in its fertiliser subsidy bill for the current financial year due to rising global prices driven by the Middle East crisis. According to a government official, higher import costs are putting pressure on subsidy outlays, which support farmers by keeping fertiliser prices below market rates.

Record Urea Imports at Higher Prices

India, the world’s largest importer of urea, has placed orders for a record 2.5 million metric tons around a quarter of its annual imports, at almost double the price paid two months ago. Supply disruptions linked to the Iran conflict have significantly tightened global availability and pushed prices upward.

These large-scale purchases are expected to further tighten global fertiliser supply and sustain elevated prices, increasing future import costs for India. This, in turn, will raise the government’s subsidy burden, which was already estimated at about Rs. 1.87 trillion for the previous financial year.

India relies heavily on imports for fertilisers such as urea, diammonium phosphate (DAP), and muriate of potash, along with liquefied natural gas used in urea production. The Middle East supplies nearly half of India’s urea and DAP imports, with Saudi Arabia and Oman being key suppliers.

Although India currently holds higher fertiliser stocks, demand is expected to surge during June and July, coinciding with the sowing season for crops like rice, corn, cotton, and oilseeds. This seasonal demand could further strain supply and pricing dynamics.

Stocks that could benefit 

Chambal is one of India’s largest urea producers and a key player in nitrogen-based fertilisers. With rising urea prices and increased imports, companies like Chambal benefit from strong demand and government subsidy support, which ensures stable revenues even during price volatility.

With a market capitalisation of Rs. 17,969 cr, the shares of Chambal Fertilisers and Chemicals Ltd were trading at Rs. 448.50 per share, up from its previous close of Rs. 446 per share. 

A leading player in phosphatic fertilisers (DAP and NPK), Coromandel benefits directly from higher global fertiliser prices and increased subsidy payouts. Its strong distribution network and diversified agri-input business help it capture demand across rural India.

With a market capitalisation of Rs. 59,318 cr, the shares of Coromandel International Ltd were trading at Rs. 2010.70 per share, down from its previous close of Rs. 2,031.50 per share. 

FACT is a major producer of complex fertilisers like ammonium phosphate. With India increasing imports and subsidy spending, domestic manufacturers like FACT gain from higher demand and improved pricing dynamics in the fertiliser market.

With a market capitalisation of Rs. 58,495 cr, the shares of Fertilizers & Chemicals Travancore Ltd were trading at Rs. 904 per share, down from its previous close of Rs. 907.30 per share. 

This company operates across fertilisers and industrial chemicals, giving it an edge during price cycles. Rising fertiliser prices improve margins, while its diversified portfolio helps cushion volatility in raw material costs.

With a market capitalisation of Rs. 15,440 cr, the shares of Deepak Fertilisers & Petrochemicals Corporation Ltd were trading at Rs. 1223.15 per share, down from its previous close of Rs. 1,240.40 per share. 

GSFC is a diversified fertiliser and chemical player. It benefits from both fertiliser demand and industrial chemical cycles, and its cost efficiency helps maintain profitability even when input costs rise.

With a market capitalisation of Rs. 6,903 cr, the shares of Gujarat State Fertilizers & Chemicals Ltd were trading at Rs. 173.25 per share, down from its previous close of Rs. 174.90 per share. 

A government-backed fertiliser company, RCF benefits significantly from subsidy increases. Higher subsidy allocation ensures stable earnings and supports expansion in urea and complex fertiliser production.  

With a market capitalisation of Rs. 7,163 cr, the shares of Rashtriya Chemicals & Fertilizers Ltd were trading at Rs. 129.85 per share, down from its previous close of Rs. 130.65 per share. 

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