Best Fertiliser Stocks to Invest Based on 5Y-CAGR

Agriculture is the third largest sector of the Indian Economy, contributing around 17% of the country’s total GDP. The emerging fertiliser industry plays a vital role in the growth of the Agriculture Sector. The balanced use of chemical fertiliser is important not only for increasing agricultural productivity but also for sustaining soil fertility.

The country’s stress on higher agricultural productivity is expected to lead to a considerably better realisation for farmers and an increase in the demand for fertilisers. The Single Super Phosphate fertiliser is a generic customised fertiliser containing sulphur, calcium & other micro nutrients besides phosphate.

The Government has floated the idea of replacing the input subsidy with direct income support to farmers, and there is a need for “replacing untargeted subsidies (power and fertiliser) by direct income support to address agricultural stress and to achieve doubling farmers’ income. The government has been spending nearly 30% of its total subsidy on food, fuel and fertiliser to ensure that farmers get the key agriculture inputs at cheaper rates. Let us now have a look at the best fertiliser stocks based on 5Y-CAGR.

Top Fertiliser Stocks Based on 5Y CAGR

Note: The above-mentioned stocks have been selected from the Nifty 500 universe and sorted on the basis of 5Y- CAGR as of June 26, 2024.

1. Fertilisers & Chemicals Travancore Ltd (FACT): Incorporated in 1943, FACT is the first large-scale fertiliser plant in India at Udyogamandal, Kochi, Kerala. The company manufactures and sells fertilisers, their by-products, and Caprolactam. It reported Revenues for Q4FY24 of ₹1,062.00 Crores, down from ₹1,249.00 Crore year on year, a fall of 14.97%.

Key Ratios

• ROE: 29.6%
• ROCE: 17.0%

2. Deepak Fertilisers and Petrochemicals Corporation Ltd: Deepak Fertilisers and Petrochemicals Corporation Ltd is in the business of fertlisers, agri services, bulk chemicals, mining chemicals and real estate. Over the last 5 quarters of Q4, Revenue and Operating EBITDA demonstrated a strong growth trend. The revenue has consistently showcased a growth trajectory over the past five years, with the exception of FY23, which had a positive anomaly.

Key Ratios

• ROE: 8.45%
• ROCE: 11.6%

3. Coromandel International Ltd: Coromandel International Ltd is one of India’s leading agri solutions providers. It offers a diverse range of products and services across the farming value chain. It specializes in fertilizers, crop protein, bio-pesticides, speciality nutrients, and organic fertilizers. The company’s business is divided among 2 main segments i.e. nutrient and other allied products (~85% of revenues) and crop protection (~15% of revenues).

Key Ratios

• ROE: 18.9%
• ROCE: 26.0%

4. Rashtriya Chemicals & Fertilizers Ltd (RCF): RCF is a public sector undertaking (PSU) with a 75% stake owned by GOI. The company is engaged in the manufacturing and marketing of fertilisers and industrial chemicals. The company is focused on the revival of Brahmaputra Valley Fertilizer Corporation Limited – Namrup Unit. The project entails setting up a Urea plant (capacity of 1.27 Million MTPA). The estimated Project Cost is INR 78,000 Mn. RCF’s share in the said JV is 17%.

Key Ratios

• ROE: 4.24%
• ROCE: 6.19%

5. Chambal Fertilisers & Chemicals Ltd: Chambal Fertilisers & Chemicals Ltd is engaged in producing Urea from its own manufacturing plants. It also markets/ deals in other fertilisers and agri-inputs. It also has a Joint Venture for manufacturing Phospohric Acid in Morocco.

Key Ratios

• ROE: 17.8%
• ROCE: 21.0%

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.