Top Fertilizer Stocks in India

The Agricultural industry has always been one of the largest employers in India. However, this industry is heavily reliant on fertilizers. Today, giving ‘Dugna Lagaan’ would have been child’s play for the farmers of the Bollywood blockbuster ‘Lagaan’.

All they would have to do is use the scientific advantage of fertilizers and the financial advantage of fertilizer stocks!

The Indian market is a prominent fertilizer consumer and manufacturer, with a market value of over ₹858 billion in FY21. Given that the market is expected to grow to become a ₹1,131 billion industry from 2022 to 2027, it would be no surprise that fertilizer stocks are worth keeping an eye on.

As a part of this blog, we look to uncover key market stocks worth looking into as investors.

Why Invest in the Fertilizer Industry?

As an investor looking to diversify into this segment, one would need a holistic idea of the industry. India is a prominent market for fertilizers, with an annual consumption of 55 metric tons.

It also imports various types of fertilizers and raw materials and produces other types of complex fertilizers. Urea, Di Ammonium Phosphate, and Tri Superphosphate, to name a few.

Overall, the industry is expected to grow at a CAGR of 4.8% from 2022 to 2027. 

In India, the market for fertilizers is divided among key government and private firms.

• The government's companies include MMTC, NFL, and GSFC, to name a few.
• Leading players in the private market include Chambal Fertilisers, Deepak Fertilizers, and Shriram Fertilizers & Chemicals.

The government is pursuing an initiative to reduce reliance on imported fertilizers and associated raw materials and expand production capabilities. Additionally, increasing rural inclusion coupled with relatively easier credit availability will likely produce a positive impact.

All in all, the key market outlook for the industry remains to be positive.

The Indian market was relatively unaffected by the pandemic, with the biggest drawback faced by the industry being in terms of labour and raw material crunch.

However, the various government initiatives to keep a steady supply of fertilizers intact have helped boost the demand in the industry. 

Top 3 Fertilizer Stocks in India

The Indian fertilizer market is a competitive one, with several prominent Indian players hailing both from the public and the private sector. Hence, we have prepared a list of the top 3 Indian fertilizer stocks, primarily based on market capitalization and other financials. 

1. Deepak Fertilizers and Petrochemicals Corporation Limited (DFPCL)

Deepak Fertilizers and Petrochemicals Corporation is among India's leading fertilizers and industrial chemicals producers. Having set up in 1979 as an ammonia manufacturer, it is currently a publicly-traded company.

It is currently involved in producing industrial chemicals, farming solutions, speciality fertilizers, etc. 

Company Fundamentals

• Market Cap: ₹7,056.56 Crore
• ROE: 11.59%
• P/E Ratio: 35.68
• Debt: ₹764.94 Crore
• Dividend Yield: 1.56%

Check out Deepak Fertilizers on Ticker.

Gujarat State Fertilizers & Chemicals Ltd (GSFC)

Gujarat State Fertilizers & Chemicals indulged in the business of fertilizers in 1967. And since then, it has marked a remarkable presence for itself with the help of its adoption of the latest production technologies.

GSFC is also a well-established producer of Polyamide-6, which is used in the production of film grades and engineering plastic.

Company Fundamentals:

• Market Cap: ₹5,245.96 Crore.
• ROE: 5.24%
• P/E Ratio: 5.89
• Debt: ₹35.01 Crore
• Dividend Yield: 1.94%

Check out GSFC on Ticker.

National Fertilizers Limited (NFL)

National Fertilizers Limited (NFL) is engaged in the production and manufacturing of Urea. It has product offerings such as bio-fertilizers, ammonia, nitric acid, and sodium nitrate, to name a few.

Incorporated in the year 1974, it is India's largest government-run fertilizer company. NFL has five gas-based ammonium-urea plants across India.

Company Fundamentals

• Market Cap: ₹1,962.31 Crore
• ROE: 12.20%
• P/E Ratio: 18.14
• Debt: ₹1,887.52 Crore
• Dividend Yield: 0%

Check out NFL on Ticker.

Fertilizer Industry Outlook & Prospects

The fertilizer industry in India is expected to continue its robust growth on the back of both private and public players in the market.

Today, the Indian fertilizer industry is worth more than ₹85,800 Crore, and with a CAGR of 4.8%, it is expected to surpass levels of ₹1.13 Lakh Crore by 2027.

Moreover, with the expansion of fertilizer production capacities in Indian along with the push to reduce dependencies on imports of fertilizers and associated products, prospects for the domestic fertilizer industry are highly bright.

That being said, as an investor, one should be aware of the possible challenges faced by the industry, primarily:

• Heavy imports due to insufficient production
• Lack of availability of raw materials
• Pricing fluctuations 
• Absence of long-term and stable policy 

When considering key drivers of the market, one would need to consider aspects associated with population growth, low penetration, allowing room for future growth, government and non-government campaigns to educate farmers, easy availability of capital in the form of loans, and increasing rural incomes, to name a few.

The Bottom Line

Investing in a particular sector in the stock market helps one leverage the maximum potential of that particular industry. Moreover, it lets investors concentrate on their research efforts and investment strategies. Considering the current growth of the Indian fertilizer industry, one must invest in this sector in a bid to appreciate their portfolio. However, this must be done according to one’s risk profile and investment style. We hope the list mentioned above of fertilizer stocks helps investors find the best ones matching their investment requirements.