Fertiliser scrips up on good rains

Good monsoon last year has given a big boost to the fertiliser sector stocks.

The stocks of some of the leading companies have even outperformed the Bombay Stock Exchange (BSE) Sensex and the BSE 500 which have risen by 103 per cent and 124 per cent, respectively, between March 31, 2003, and January 14, 2004.

The stock price of Hind Lever Chemicals, which is in the process of being merged with Tata Chemicals, increased 151.05 per cent from Rs 146.80 on March 31, 2003 to Rs 368.55 on January 14, 2004 on the BSE.

Similarly, the share price of the A V Birla group company Indo Gulf Fertilisers (the demerged entity) increased 266.23 per cent from Rs 31.10 to Rs 113.90.

The share price of the public sector undertaking Rashtriya Chemicals & Fertilizers (RCF) increased 310.07 per cent from Rs 13.90 to Rs 52.90. The Zuari Industries scrip jumped 222.52 per cent from Rs 18.70 to Rs 58.70.

In percentage terms, the biggest gainer was Gujarat State Fertilizer Corporation (GSFC). Its scrip jumped 337.74 per cent from Rs 15.50 to Rs 67.85.

The other major gainer was Coromandel Fertilizers. Its scrip jumped 157.39 per cent from Rs 62.55 to Rs 161.

"The good monsoon last year has also put more money in the hands of the farmers. Subsequently, the farmers will spend more on fertilisers before the next monsoon. However, it is a sector that should witness modest growth in stock prices," said K Ramchandran, head of the advisory desk of BNP Paribas Private Banking.

Apart from the good monsoons, the fertiliser industry has also benefited from the demand-supply mismatch.

In 2002-03, the demand was 33 million tonnes while the installed capacity was only 31 million tonnes.

The bulk of the fertiliser capacity is in nitrogenous and phosphatic fertilisers at 17.7 million tonnes.

About 13 million tonnes of nitrogenous fertilisers and Urea accounts for about 95 per cent of the nitrogenous fertiliser consumption in India.