The Hindu Business Line : Talk of Budget sops pushes fertiliser stocks up

Mumbai, Feb. 6 Hopes that the Government may offer sops to the fertiliser sector in the upcoming Budget session pushed up share prices of the sector. Even though the markets ended the day in red, fertiliser stocks were up.

Nagarjuna Fertilisers and Chemicals was up a massive 12.84 per cent, Chambal Fertilisers and Chemicals was up by 8.56 per cent, Bharat Fertiliser Industries surged ahead 4.99 per cent, Mangalore Chemicals and Fertilisers was up by 4.99 per cent and Deepak Fertilisers and Petrochemicals Corporation shot up by 19.89 per cent.

Analysts say there always tends to be some build-up in fertiliser stocks when it is time for the Budget. “The Ministry seems to be pro-agriculture where they tend to increase subsidies and soften taxes in order to appease the farmers. The market this time around as well seems to be expecting some news in favour of the fertiliser companies during this session of the Budget,” said Mr Prashant Bhansali, Director, Mehta Equities Ltd.

Triggers

Speculation about subsidies, tax softening, and lower import duty on equipment have all lead the increase in interest in fertiliser sector stocks, say market watchers. Deepak Fertilizers and Petrochemicals Corporation was up 19.88 per cent to end the day at Rs 141.10. Market men say this is because of the news of their joint venture with Norwegian Fertiliser giant Yara International ASA.

Deepak Fertilizers would own 51 per cent of the joint venture while Yara would own the balance 49 per cent. The venture would review opportunities for production, marketing and import of specialty fertilizers in focused States like Maharashtra and Gujarat, where Deepak Fertilizers has considerable strengths. It would also invest in the 3-lakh mt-per-annum AN plant under construction at Paradip in Orissa.

At lower levels

“The stocks of fertiliser stocks were badly hammered recently, and the valuations seem to have become more attractive now for the investors at these lower levels. Coupled with this, there are expectations of sops being given to the fertiliser sector companies,” said Ms Anita Gandhi, Head-Institutional Business, Arihant Capital Markets Ltd. She added that people might think it is safer to buy the stocks at these levels.

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