Roll of dice for agrochem companies with El Nino dampener on monsoon

Adverse agronomical conditions, excess channel inventory weigh on domestic market volume offtake

Domestic-focused agricultural chemical (agrochem) companies could face near-term headwinds, given the worries on the El Niño effect on monsoons, higher inventory, and pressure on margins. Some of these were reflected in the October-December quarter (third quarter, or Q3) results of companies and may impact them in the current quarter (fourth quarter, or Q4) as well.

Nuvama Research pointed out that the sector witnessed mixed performance during the quarter as global agrochem and domestic fertiliser companies maintained growth momentum, while adverse agronomical conditions and excess channel inventory weighed on domestic market volume offtake.

Dhanuka Agritech and Rallis, which generate a majority