Agrochemicals shares rally up to 12% on healthy outlook; Rallis at new high

Analysts at Elara Capital remain bullish on the Rallis' crop care division prospects, driven by the robust outlook on the domestic business and cautiously optimistic outlook on the international biz.

Shares of pesticides & agrochemicals including fertilizers were in demand and rallied up to 12 per cent on the BSE in Tuesday’s intra-day trade backed by heavy volumes. The buying at these counters has been attributed to a healthy business outlook as the sentiment for the domestic market remains positive owing to the pick-up in monsoon activity.
 

Rallis India, Insecticides (India), Deepak Fertilisers & Petrochemicals Corporation and UPL were up between 4 per cent - 12 per cent.

An above-normal rain has been forecast by the Indian Meteorological Department (IMD) during the June to September monsoon. It is expected to boost the prospects of a bountiful agricultural harvest.

 

The Indian agrochemicals market is expected to grow from $8.22 billion in 2024 to $13.08 billion by 2029, with a steady increase of 4 per cent each year. Several key factors act as growth drivers for the industry such as shifting dietary habits among the population, rapid population growth, changing weather patterns, increased occurrences of natural disasters and favourable technological advancements.

Among individual stocks, Rallis India hit a record high of Rs 373, as it surged 12 per cent on the back of a 3-fold jump in average traded volumes. The stock surpassed its previous high of Rs 357.20 hit on July 16, 2024. Rallis India is a subsidiary of Tata Chemicals and a part of the Tata Group.

The company is one of India’s leading agri sciences companies, with more than 75 years of experience of servicing rural markets with the most comprehensive portfolio of products/ solutions for Indian farmers.

Rallis’ outlook for the Indian agriculture industry is optimistic and is committed to adapting evolving markets. Rallis’ portfolio of crop protection, crop nutrition and improved seeds supported by a wide market reach aims to address emerging needs of Indian farming community.

Analysts at Elara Capital remain bullish on the Rallis's crop care division prospects, driven by the robust outlook on the domestic business and cautiously optimistic outlook on the international business.

The brokerage firm retain 'Accumulate' rating with a higher target price of Rs 380 from Rs 305 based on a revised 28x (from 22x) FY26E target P/E, as analysts feel the optimism toward India’s agriculture ecosystem driven by above normal monsoon, will result in healthy earnings growth. This along with the buoyancy in the stock markets could drive valuation multiples higher than the historical average.

Shares of Insecticides (India) surged 10 per cent to hit a 52-week high of Rs 884.70 on the BSE in intra-day trade. The stock had hit a record high of Rs 1,094.95 on August 16, 2022.

The company has introduced 8 new products in FY24, which generated revenue of Rs 51 crore and demonstrated wider product acceptance, driving innovation and value. The company expects to launch at least 7-8 new products in FY25.