Indian agrochemical companies continue to face pricing challenges despite growth in both export volumes and domestic demand, resulting in missed earnings estimates and subsequent downgrades by brokerages. Leading firms like UPL, Anupam Rasayan, and Rallis are struggling due to pricing pressures and excessive imports from China, impacting their profitability.
Analysts Ranjit Cirumalla and Viral M Shah have downgraded stocks like Kaveri Seeds and Bayer CropScience, citing disappointing performance and unrealistic stock price hikes. Kotak Institutional Equities warns that a near-term recovery is unlikely, given declining global farm incomes and falling prices of key crops such as corn and soybeans, which could suppress demand for agricultural inputs.
In contrast, the domestic market shows promise, with companies reporting strong Q1 results fueled by robust demand and increased rainfall. Analysts Rohan Gupta and Rohan Ohri foresee sustained growth driven by favorable weather and continued sowing activities but note that fertiliser companies are underperforming due to lower realizations and higher input costs.
Sharekhan Research highlights a sequential improvement in domestic agri-input companies’ performance, boosted by a strong Kharif season. Although a full recovery may take multiple quarters, long-term prospects remain promising thanks to strategic initiatives like the China Plus One strategy and efforts in import substitution. Optimism surrounds companies like PI Industries, Insecticides (India), and Sumitomo Chemical, which are expected to help expand India’s global market share in the industry.
