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The ₹48,000-crore agro input industry is likely to post a ‘positive’ growth in revenues in the first quarter of the current financial year.
A strong demand for agro-chemical products in the domestic and international markets are among the top reasons for industry experts to forecast a positive growth in the first quarter.
“A strong demand in the export segment and higher global commodity prices would drive the revenue growth in the quarter,” Varshit Shah, an analyst with research firm Emkay Globa, has said.
Giving a review of the firms under its coverage, he pointed out that all agro-chemical companies have passed on the impact of higher raw material prices to the consumers in the quarter. “We expect agrochemical companies in our coverage to deliver 10.8 per cent year-on-year growth,” he said.
Positive growth
Insecticides (India) Limited Managing Director Rajesh Aggarwal, however, has said that it would be difficult for the industry to achieve a double digit growth in the quarter.
“It is very difficult for the industry to achieve that but what I can say is that it will be a positive first quarter. There is a good demand in the domestic and international markets for agro-chemical products,” he said.
Kalyan Goswami, Director-General of Agro Chem Federation of India (ACFI), has felt that the first quarter could be an ‘average quarter’ for the industry.
“Due to earlier advance sales and delayed monsoon, sales and consumption are yet to pick up. We are expecting rains to pick up in the second week of July, triggering demand in the second quarter,” he said.
“We are sure that the on-going kharif season will see a positive growth in sales and consumption of agri inputs,” he said.
Challenges
The Emkay Global report, however, flagged a few important issues that are needed to be watched closely. “Freight costs continued an upward trend due to container shortages and backlog of clearance due to the Suez Canal blockage,” it said.
“The key things to watch out for in the first quarter earnings are stabilisation of the freight costs, cooling off in key intermediates and other raw materials, and possible price hikes to compensate for rising packaging and freight costs,” it pointed out.
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