Predictions of normal rains a fillip for agrochem firms

Domestic companies may outperform exporters in March quarter and in FY25

- RAM PRASAD SAHU

With a normal monsoon predicted in India this year by private weather forecasting agency Skymet and the India Meteorological Department (IMD), prospects for domestic agrochemical or agri-input companies are expected to improve.

Brokerages believe that the companies whose bulk of revenue comes from the domestic market will outperform exporters in the March quarter (Q4FY24) and in FY25.

Demand for agricultural inputs was weak in the December quarter due to elevated channel inventory, higher imports from China and pressure on realisations, which weighed on margins.

Sentiment in the rabi season was impacted by below-normal rainfall and lower reservoir levels. There could be some improvement in the March quarter.

Nuvama Research expects domestic agrochem players to report healthy growth in the March quarter, while fertiliser and global agrochem players are likely to see lacklustre performance.

Drilling down, fertiliser players may face margin pressures due to reduced subsidies, and global agrochem players due to inventory destocking and higher rebates/discounts.