How Have Fertiliser Stocks Performed One Month Before and After the Union Budget?

Synopsis: Ahead of Budget FY25, fertiliser stocks showed mixed January moves: Chambal +3%, GSFC +4%, while FACT, RCF and Coromandel fell; February saw declines despite subsidies.

Investors often focus on agricultural products before the budget, as their sales are largely attributable to agricultural production by farmers through the supported prices on fertilisers set by governments. The sectors inside the new budget were said to show increased or continued amounts of subsidy support from the government. 

The announcement of cuts in subsidy levels or stricter price controls creates negative sentiment for fertiliser stocks, resulting in selling pressure on stocks before budget approval. The same goes for all types of agricultural support stocks. Every increase or continued agricultural support from the Government has a positive direct impact on fertiliser stock margins and the overall financial strength of fertiliser producers.

An expected fertiliser budget is determined by predicting how much fertilizer will be consumed, how high natural gas prices will be, and the fluctuating assumed global fertiliser price on an annual basis. For FY 25, total Department of Fertiliser funding increased from Rs. 1.68 lakh crores to Rs. 1.92 lakh crores due to increased supplementary grants.

The National Bio-Security (NBS) programme was also expanded from Rs. 45,000 crores to Rs. 54,310 crores with no cuts. Also extended to 2025-2026 is the existing subsidy scheme under the Pradhan Mantri Krishi Sinchai Yojana, which will have a projected total outlay of Rs. 93,068.56 crore.

Fertilizers and Chemicals Travancore Ltd (FACT)

FACT is a Kerala-based government-owned fertilizer company primarily producing ammonium sulfate and phosphatic fertilizers. It supplies mainly to the southern states of India and has a strong focus on sustainable agriculture solutions, with a legacy of over six decades in the industry.

With a market capitalisation of Rs. 53,163 cr, the shares of Fertilizers & Chemicals Travancore Ltd are currently trading at Rs. 821.60 per share, down from its previous close of Rs. 827.85 per share. In Jan 2025, the stock was down 6%, ahead of the year’s Union Budget. In the following month, the stock declined by 24%.

Chambal Fertilisers and Chemicals Ltd

Chambal Fertilisers, part of the Chambal Group, is a leading manufacturer of urea and other nitrogen-based fertilizers. It operates with a focus on efficient production and distribution, catering to farmers across northern and western India, and has significant government ties for supply agreements.

With a market capitalisation of Rs. 17,278 cr, the shares of Chambal Fertilisers and Chemicals Ltd are currently trading at Rs. 431.25 per share, down from its previous close of Rs. 438.40 per share. In Jan 2025, the stock was up 3%, ahead of the year’s Union Budget. In the following month, the stock increased by 6%.

Rashtriya Chemicals & Fertilizers Ltd (RCF)

RCF is a Mumbai-based public sector undertaking producing urea, complex fertilizers, and industrial chemicals. Known for its reliability and consistent production, it serves both agricultural and industrial sectors, with a strong emphasis on quality and environmental compliance.

With a market capitalisation of Rs. 7,392 cr, the shares of Rashtriya Chemicals & Fertilizers Ltd are currently trading at Rs. 134 per share, down from its previous close of Rs. 135.10 per share. In Jan 2025, the stock was down 6%, ahead of the year’s Union Budget. In the following month, the stock declined by 28%.

Gujarat State Fertilizers & Chemicals Ltd (GSFC)

GSFC, based in Gujarat, manufactures urea, complex fertilizers, and industrial chemicals. It has a diversified portfolio serving agriculture and industries, with a focus on innovation in crop nutrition and strong market penetration across India.

With a market capitalisation of Rs. 6,778 cr, the shares of Gujarat State Fertilizers & Chemicals Ltd are currently trading at Rs. 170.10 per share, down from its previous close of Rs. 170.90 per share. In Jan 2025, the stock was up 4%, ahead of the year’s Union Budget. In the following month, the stock declined by 18%.

Coromandel International Ltd

Coromandel International is a private-sector fertilizer and crop protection company headquartered in Hyderabad. It produces phosphatic and complex fertilisers and has a strong presence in agri-inputs, seeds, and retail distribution, making it a key player in supporting Indian farmers’ productivity.

With a market capitalisation of Rs. 66,907 cr, the shares of Coromandel International Ltd are currently trading at Rs. 2,268.10 per share, down from its previous close of Rs. 2,271.80 per share. In Jan 2025, the stock was down 4%, ahead of the year’s Union Budget. In the following month, the stock declined by 8%.

In conclusion fertilizer stocks tend to remain highly sensitive to Budget-related expectations on subsidies and price controls. While government outlays for FY25 increased, market sentiment stayed cautious, leading to mixed pre-Budget gains and sharper post-Budget corrections across most stocks.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post How Have Fertiliser Stocks Performed One Month Before and After the Union Budget? appeared first on Trade Brains.