Agri input firms like PI Industries, UPL, Rallis India, and Coromandel International have given a major bounce in the shares, by up to 36 percent as compared to the low closing they recorded in March. In the month of March, these players recorded a decline as half as their usual shares. One of the factors in the earlier decline was the supply disruption led by the lockdown. However, export-oriented players are expected to witness more earnings, as per analysts.
Experts are worried about major challenges facing the agriculture industry in today’s time - delay in crop procurement due to COVID-19 crisis, a sharp reduction in the prices of Agri produce and consequent decline in purchasing power of farmers, fluctuating demand for agri-produce, and the disruption in export markets – these are some of the concerns.
Therefore, it is expected that the India-focused Agri input players with strong balance sheets are in a better position as of now. The domestic demand for Agri input firms is unlikely to be impacted by the lockdown as the sowing for the Kharif crop being in June.
The expectation of the arrival of normal monsoon is also a factor that could improve the share price as the crops harvested in Kharif and rabi seasons will be good in terms of higher output.
UPL and Sharda Cropchem are among the few agrochemical exporters that have grown significantly. In case of delayed procurement in domestic markets, experts feel companies with strong balance sheets are well-placed to push sales on credit and gain market share, as per reports. Companies like PI Industries, Coromandel International, and Rallis India have decent balance sheets but some uncertainties over exports might weigh on near-term prospects, as per reports.
