Kheti Bhari: Top 5 Agriculture Stocks In India

Created on 28 Jul 2022

Wraps up in 6 Min

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Updated on 31 Aug 2022

Farmers Capitalist investors are the backbone of our country. While You Invest, Farmers Rest (In Peace).

Mark Twain famously said, "The world is divided into two types of people. The first ones are those who saw the famous monument, the Taj Mahal. While the second ones are those, who have not." Similarly, the world of investment has two types of investors: those who are aware of investment opportunities and others who aren't. 

The stock market provides investors with opportunities that promise hefty returns. But first, you should know how trading is conducted in a stock market. The trading in the stock market is conducted through two centres: National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The best part is that the trades are conducted without any market makers! "No, no, stop! Listen to Raju, and don't shout out the scheme to everyone!" We have more financial advice awaited! 

You might have visited the library many times and even read many types of books, but there might be a particular genre that you enjoy the most, and therefore, you love investing your reading time in it. In the same way, every stock is not from the same sector, and investors must know the right sector for making their investments. The stock market is divided into various sectors such as automobiles, agriculture, textiles, etc. 

Out of these, the agriculture sector is emerging as the most prominent. So check out this perfect guide for agriculture stocks in India. 

Agriculture in India accounts for up to 13% of the country's economy.

Factors to Consider Before Buying Agricultural Stocks in India

Agriculture is continuously growing as a crucial sector because of the vast headroom for constant consumption. 

Jeremy Grantham was rightly quoted as saying: "Modern agriculture has been accurately described as a way of turning oil into food. As oil prices continue to rise, so will the price of food." This makes the sector a great opportunity for all investors. However, investing in the right agri stocks is necessary to get good returns. Therefore, some of the factors to consider before investing in any agriculture listed company are as follows:

1. Assessing the range of products of the company

Investors should be aware of the various types of products offered by the company. The reason is that a company offering various products has a greater chance of fetching better sales. 

For instance, a decrease in the sales of one product is balanced by the other products. This, in turn, reaps a better overall profit for the company. Consequently, this makes the company a favourable option for investment. 

2. Determining the location of the company 

An investor should know the company's location before investing in agriculture stocks in India. The reason is that the various seasons impact the sales of agriculture or related companies. For instance, if a particular location witnesses low rainfall, it reduces the yield, impacting the company's sales. 

So, investing in companies whose revenues do not get affected even if there is no proper harvest is necessary. On the other hand, a company that operates in multiple locations and has a presence in various markets generates better revenue. For instance, if the particular location of the company witnesses a lower sale, then they can increase their sales in other states.

3. Determining the financial strength of the agri stocks

Investors should assess the company's financial strength before investing in agriculture stocks in India. It determines the growth and sustainability of the company. Investors can assess the company's financial strength by considering its returns, especially in the off-season.

India has gained the reputation of being the largest jute producer in the world.

Top 5 Agricultural Company Stocks

Alan Autry was rightly quoted as saying: "High tech companies that focus on research, development, and production will learn that they can be the perfect complement to our world-renowned agriculture heritage." 

The below-mentioned listed agriculture companies are proving to be testimonials for the same. So, let us have a look at the best agriculture stocks in India:

1. Kaveri Seeds Corporation Limited

The India-based company is an integrated provider of many farm products. The company's major focus is on micro-nutrients, soil enhancers, hybrid seeds, organic fungicides, etc. Some of the factors you should consider before investing in agri stocks of Kaveri Corporation Limited are as follows:

  • Share price: 500.90
  • Market capitalization: 2,921
  • PE: 13.75
  • ROE: 16.58 %
  • Net sales: Rs. 969

2. Bombay Burmah Trading Corporation Limited

Bombay Burmah Trading Corporation Limited is among India's most reputed business houses. The company deals in coffee plantations, tea plantations, plantation products, pepper and rubber plantations, etc.

Some of the factors you should consider before investing in agri stocks of Bombay Burmah Trading Corporation Limited are as follows:

  • Share price: 940.15
  • Market Capitalisation: 6,559.61
  • PE: 662.08
  • ROE: 4.68%
  • Net sales: Rs. 339

3. Goodricke Group Limited

Goodricke Group Limited is a pioneer in tea production. The company is a part of Camellia PLC UK, which is the largest private sector tea producer worldwide. Being a tea-producing house, Goodricke has a vast range of tea products, from Orthodox tea to Bulk teas - CTC. 

They treat, cultivate, manufacture, blend, sell, buy, deal, and grow tea in different forms. Some of the factors you should consider before investing in agri stocks of Goodricke Group Limited are as follows:

  • Share price: 243.45
  • Market capitalization: 525.85 
  • PE: 99.77
  • ROE: 1.63%
  • Net sales: Rs. 823

4. JK Agri Genetics Limited

JK Agri Genetics Limited is one of the pioneers in the Indian seed industry and has shown a remarkable commitment to the farming community.

The company is engaged in developing, processing, researching, and manufacturing products like castor, sorghum, wheat, cotton, pearl millet, paddy maize, tomato, sunflower, etc.

Some of the factors you should consider before investing in agri stocks of JK Agri Genetics Limited are as follows:

  • Share Price: 638.00
  • Market capitalization: 295.84
  • PE: 38.27
  • ROE: 5.44%
  • Net sales: Rs. 245

5. Agri Tech Private Limited

Agri Tech Private Limited was initially incorporated under the name Somnath Farms Private Limited. The company was later turned into a public limited company. The company is engaged in the business of research, development and manufacture of seeds.

Some of the factors you should consider before investing in agri stocks of Agri Tech  are as follows:

  • Share Price: 83.00
  • Market capitalization: 49.30
  • PE: 17.93
  • ROE: 2.99%
  • Net sales: none
The famous Indian chai tea grown in Kerala does not have the same taste if grown elsewhere.

Why are Agricultural Stocks so Popular?

Allan Savoury rightly said: "Agriculture has not cropped production as popular belief holds - it's the production of food and fibre from the world's land and waters." Without agriculture, it is impossible to have a city, stock market, banks, university, church, or army. Agriculture is the foundation of civilization and any stable economy.” 

The same vision and belief are seen in the growth factors of agriculture. Some of the factors leading to the popularity of investment in this sector are as follows:

  • The sector is the livelihood for 58% of the entire workforce in India. Apart from that, it accounts for 17.8 % of the gross value added (GVA). 

  • India has tremendously increased its agricultural production in both volume and variety. This positive change has impacted the growth of many agrochemical industries. 

  • The ever-increasing need for economic growth and the rapidly rising population are two main factors driving the growth of the agricultural sector. This, in turn, has led to the growth of agriculture stocks in India.

  • The deployment of "Kisan Drones' for promoting the assessment of crops has led to better yields.

  • The investment of Rs. 131,000 crores by the Central Government into the agriculture sector has given a boost to the sector.

The Bottom Line

The agriculture sector is packed with investment opportunities. However, a detailed financial data analysis is necessary to evaluate the company's actual net worth, which requires a careful examination of the company's profit and loss account.

It is pretty cumbersome and time-consuming, so Finology has introduced a perfect solution. Ticker by Finology assists in conducting real-time financial data analysis.

It provides information on agricultural stocks in India. It includes information such as the return of assets, the PE ratio, the return on equity, and a lot more to make the stock analysis a cakewalk.

Let us know which are the best agriculture stocks in India according to you in the comment section!

*Disclaimer: The stocks discussed above are here to make you understand the concept and are not the recommendations of Finology.  

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Deb P Samaddar

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If people could be named after idioms, Deb would be called "I'm all ears." His brain is a storehouse, ever overflowing with derelict information. So, while most things he talks about are as useless as occasion-less greeting cards, everything he writes has the potential of bagging you multiple diplomas!

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