Insecticides India granted process patent for Acetamiprid

[Editor: Buy Insecticides (India) Ltd (BSE Code: 532851) at CMP of Rs.280-282, for an immediate target of Rs.320. Both the DIIs and FIIs have increased their stake in the company in Q3FY14 as against Q2FY14]

New Delhi  April 19, 2014: Indian Patent Office has granted Insecticides India Ltd (IIL) a process patent for an insecticide product – giving a shot in the arm for the research and development efforts of the company. The patent has been granted for process of preparing Acetamiprid, an insecticide for sucking pests. IIL, which has also partnered with Japan’s OAT Agrio Co Ltd to set up a joint venture for invention of new molecules in India for the international requirements, has so far filed for eight patents for process of different chemical compounds.

“This was the efforts from the in-house research and development centre. We had filed for the patent with India's Controller General of Patents, Designs & Trademarks for process of preparation for Acetamiprid technical in 2005. Though the process took a longer time, still we are optimistic for our other applications as well. This grant will encourage our team to work further in this direction,” said Rajesh Aggarwal, Managing Director, Insecticides India.  

Dr Mukesh, General Manager, R&D and Quality Control, Insecticides India, added, “At IIL, we put a lot of focus on research and development. Our R&D centre at Chopanki in Rajasthan is a testimony to this. The grant for process of preparing Acetamiprid will boost our efforts for further research. We are excited about this achievement and look forward.”

Insecticides India is one of the leading agrochemicals manufacturing company with a top line of Rs 650 crore in last fiscal (2012-13). The company is expected to touch Rs 900 crore this fiscal.

Courtesy: Business Standard

WINNING STROKES: THINK DIFFERENT

My recommended Marg Ltd hit another buyer freeze at Rs.14.78. The scrip has been hitting continuous buyer circuits after its recommendation. Congratulations to those PAID MEMBERS who could pick up that stock on that day. 

Insecticides India Ltd ( BSE Code: 532851) today  touched Rs.284.65, before cooling down at  Rs.282 in the BSE and Rs.283 in the NSE. The scrip is all set to touch Rs.370-290 in the coming days in view of rise of the shares of the companies from this space. The monsoon is coming and the demand for the company's products are going to increase in future. Also, there is a gradual rise in the use of pesticides all  over India, during the last couple of years and the company stands to benefit from this event. Agriculture is the dominant sector of Indian economy, which determines the growth and sustainability. About 65% of the Indians still relies on agriculture for employment and livelihood. The company has touched more than 4 lakhs farmers in person to help them in getting the best harvest out of their efforts. Apart from acquiring new technologies and making tie-ups with globally successful brands, Insecticides India Ltd is keen to develop new agro-chemical molecules through R&D. The market for agrochemicals is expected to grow at the rate of 7.5% to reach USD 3.5 billion by FY15. The expected growth is supported by the fact that India's agrochemical consumption is one of the lowest in the world with per hectare consumption of just 0.58 kg compared to US (4.5 Kg/ha) and Japan (11 Kg/ha). The suboptimal and inadequate usage of agrochemicals incurs 20-30% losses every year. The company will be commencing a new R&D Centre in JV with the leading Japanese Company, Otsuka Agri Techno Co Ltd at Chopanki, Rajasthan by the 1st part of FY15. The objective of this new Research Venture will be to invent agrochemical molecules in India for the international requirements. The research centre aims to invent 4-5 molecules in the next five years. Very recently, Indian Patent Office has granted Insecticides India Ltd (IIL) a process patent for an insecticide product – giving a shot in the arm for the research and development efforts of the company. Insecticides India is one of the leading agrochemicals manufacturing company with a top line of Rs.650 crore in last fiscal (2012-13). The company is expected to touch Rs.900 crore this fiscal.

The subscription fees for the Premium (Paid) Service is going to increase to Rs.10, 000 per year from the current Rs.7000 per year from 15th May, 2014. Therefore, those who are interested are requested to either enroll before that or trade through my recommended brokerage house/s with a minimum  portfolio size of Rs.1 lakh, to get this service FREE of charge.

It seems PVP Ventures Ltd (Rs.7.91) has completed the correction and is ready to move up from the retracement point. The CMD of the company stands to get direct benefit from any positive results from Telugu Desham Party (TDP).   Moreover, there were media reports that PVP Ventures Limited, a Hyderabad-based multi-business house with interests in real estate, media and entertainment, in partnership with retired cricketer Sachin Tendulkar, has won the rights to own a Kochi-based soccer club that is part of the eight-city Indian Super League. PVP also owns Hyderabad Hotshots, the inaugural Indian Badminton League champion team. The scrip is now all set to reach Rs.12-13, in the coming days. 

A2Z Maintenance and Engineering Services Ltd (Rs.10.13) is going down due to no apparent reasons. The company has completed a master restructuring and is expected to improve at least its top-line in the coming days. However, according to a media report,  A2Z Maintenance and Engineering Services Ltd, Gurgaon which bagged contracts for setting up power plants, is having issues in  completing the projects according to the agreed time schedule. A major thrust area of the SAD-BJP regime has been to make Punjab surplus in power. However, while doing so, there is evidence to suggest Chief Minister Parkash Singh Badal’s extended family allegedly benefited as the second in the series of The Tribune’s investigative report reveals--this is having some sentimental effect on the company, in the short term. But any NDA (BJP and its allies) win in the Lok Sabha elections, could work miracles for the company. Besides, an ace investor is still holding around 10% stake in the company. So, I strongly feel that this could be another Suzlon Energy Ltd, which shot up from a low of Rs.5.72 to the CMP of Rs.14.27, after touching an yearly  high of Rs.15.55 on 10th April, 2014. If you remember Suzlon Energy Ltd was also strongly recommended by me for a target of Rs.15, which was achieved long back. Therefore, you should accumulate the scrip on all declines. 

The scrip of Glodyne Technoserve Ltd (Rs.6.64) today closed above its 50 DSMA and 50DEMAs. The next target seems to be Rs.7.90, after bouncing back from the retracement levels.

IVRCL Ltd as expected recovered today, after touching a high of Rs.15.59, in the late trade, before again sinking down to Rs.15.04 at the end of the day. Though there are some liquidity issues in the company, but I feel with the completion of the CDR, the fundamentals of the company would improve substantially. If you are getting the scrip at such a low price,  it is time to accumulate the same for the long term. Buy at least 20, 000-30, 000, shares of the company and keep holding---I am sure most of you would be benefited.

Vijay Shanthi Builders Ltd is consolidating the current price of Rs.11.37-11.50. A large move is expected from the scrip post Q4FY14 results. This is a very safe counter and have always given returns to patient investors.

Insecticides India Ltd: Makes a New 52-week High

Insecticides India Ltd (Rs.862.55) which was recommended around Rs.280-282 on 28 April , 20114 in this blog, made a new 52-week high on 14 November, 2014. The scrip was asked  to be accumulated on all dips.  The stock of the company, earlier touched all its short and medium term targets. Congratulations to all those who have made money in this scrip. 

It is to be noted that the Agro-chemicals manufacturer Insecticides (India) Ltd (IIL) has reported a 66 per cent increase in net profit for the second quarter ended September 30, 2014 at Rs.22.93 crore against Rs.13.84 crore a year ago. The IIL board has recommended one bonus share each against two shares for its shareholders.

WINNING STROKES: THINK DIFFERENT

In the morning, looking at the uncertainties of the market, the Premium Members, were asked to carry long in Nifty, but with strict  stop loss of 6650 (corresponding to Nifty_Spot rates). At that time the Nifty_Spot was trading at 6712.80, which later rose to 6741.05, giving handsome intra-day gains to the traders. The Nifty closed at 6699.35 with a very small gain of 4.55 points, snapping 5 day losing streak. Today also FIIs were net buyers to the tune of Rs.279.86 crores of Indian

Photo: The Economic Times

equities.  Now where will the Nifty go from here and how to play with it? Should we buy 6000 put of 8000 Nifty_Call? To know all this join before 15th May, 2014, to avail of the old subscription charge. After 15 May, 2014, the Paid Membership charges would be enhanced to Rs.10, 000 per year, which will be further hiked to Rs.12, 000 per year from next January (2015). Also, I do not have any LIFETIME Offers / Membership Cards, for the Paid Subscription, hence kindly refrain sending any request on the same. I maintain some Ethics and Principle, in this space; as I am not a "Bazaaru" (Commercial) guy who wants to sell anything and everything, at any cost.  

Opto Circuits Ltd today rose to Rs.34.45 before cooling down at Rs.33.15. The company would have a board meeting  to discuss various options like FCCB/GDR/Preferential Allotment/Private Placement/issue of Convertible Debentures offering and any other form of raising funds for OPTO Circuits (India) Limited and/or for its Indian/Overseas Subsidiaries for its future expansion, growth, joint ventures, acquisition of technologies and Research and development activities. The hidden meaning is that the results of Q4FY14 and Q1FY15 could be better than expected. It is a huge company but only problem is the stressed balance sheet. 
Marg Limited hit another buyer at Rs.17.05. The scrip has more than doubled from the recommended price during the last couple of months. 

The scrip of A2Z maintenance and Engineering Services Ltd (Rs.9.98) and Shiv Vani Oil and Gas Exploration Ltd (Rs.13.05) should slowly come out of their blues after the master restructuring. Both the companies have orders in hand but due to high interest cost is suffering. Once this problem is mitigated, both the scrip would give superb returns going forward---there are lot of scrips in the past which showed similar characteristics. 

Country Club India Ltd, just closed above the crucial support, but is expected to touch Rs.17-18 in the coming days, where you can book profits. Leisure and infrastructure firm Country Club India, which has 55 properties across 10 nations, is planning to strengthen presence overseas and is targeting 1 million membership in a decade, according to a news published in Economic Times on 3rd May, 2014. 

Jai Balaji Industries Ltd hit another buyer freeze today at Rs.18.10. The scrip is slowly heading towards Rs.31-32 in the coming days. 

Insecticides India Ltd is consolidating at the current price of Rs.275-277, and a break out is expected on the other side of border line. Recently the Business Standard reported that the agrochemical firm Insecticides (India) Ltd (IIL) has been granted a patent for the preparation process of a chemical compound to control pests. 

Pawan Kalyan and 
Potluri Vara Prasad (PVP)

PVP Ventures Ltd, today closed at Rs.6.89, but I am expecting the scrip to race past Rs.12-13, post declaration of the election results. It is widely believed that the TDP will do much better at least in Seemandhra, if not in Telengana. It is another Raj Television Network Ltd (Rs.133.20) in the making. On May 7, 2014, Andhra Pradesha (Seemandhra) goes to poll in the following constituencies: Aruku, Srikakulam, Vizianagaram, Vishakhapatnam, Anakapalli, Kakinada, Amalapuram, Rajahmundy, Narsapuram, Eluru, Machilipatnam, Vijayawada, Guntur, Narasaraopet, Bapatla, Ongole, Nandyal, Kurnool, Anantapur, Hindupur, Kadapa, Nellore, Tirupati, Rajampet, Chittoor. 

Photo: One India

My earnest appeal to all of you is to vote, Telegu Desham Party (TDP) Candidates in all the constituencies---just vote on the Party Symbol of the TDP; kindly don't look at the religion or caste or language of the candidates. Also, take along with you all your friends and acquaintances apart from the family members to the polling booth. Every vote is important. Unless you give your mandates,  how will your candidates win? Please vote for a change. 

Insecticides at historic high on 'Monocil' buy

Insecticides zoomed 11% at Rs 339 after the company said it has entered into an agreement to acquire the brand viz. 'MONOCIL' with NOCIL Ltd along with all exclusive rights. The stock ended with 5.5% gains at Rs 322.

The stock opened at Rs 305 and touched high of Rs 347 on the NSE. The trading volumes at the counter jumped multiple-fold with as many as 2.83 million shares already changing hands so far as against an average 211,926 shares traded daily in past two weeks.

Meanwhile, Nocil on the other hand has soared 16% to Rs 18.50 on the NSE.  A combined 5.45 million shares have changed hands on the counter till 1500 hrs on both the exchanges.

Insecticides India Ltd: On the Verge of a Break Out

The EPS growth for FY15 as estimated by Crisil Research is 38.1% as against 5.8% in FY14. 

The company has been bringing successful global brands in India and this has started to show its positive effects both on the top and bottomlines--it holds some of the leading Indian and International brands. With new technical plant at Dahej already starting to churn out technical grade products, all pants working at their optimum capacities and the company getting overwhelming response to the international products like Pulsor, Hakama and Nuvan, it is all set to charter new path in the coming days. Therefore, in the medium term the scrip can even cross Rs.400.

Do You Know?

Insecticides (India) Ltd was recommended around Rs.280-282 some months back in this blog. After that it was recommended on August 28, 2014 by SBICap Securities for a target of Rs.898. The scrip then made a 52-week high of Rs.931.80 on 10/12/2014. Today it closed at Rs.878.15.

Zero Budget Farming and NFL

Photo: India Mart

Synthetic Fertilizers enrich soil with nitrogen, phosphorous and potassium; the three primary nutrients necessary for plant growth.

Post union budget for FY21, there has been a spate of copy cat versions of media reports that seemed to suggest that Zero budget farming is anti-fertilizer, anti-pesticides, and anti-chemical move; as it emphasizes largely on traditional methods of farming. 

However,  the reality is different. It is actually a theory that calls for the attention of the farmers towards using natural farming practices to cultivate crops. Without pesticides, the crop yield would come down drastically.

But that is actually not the issue here. We need to look at this from budget speech angle,  when  I believe the FM, Nirmala Sitaraman actually meant of a balanced use of fertilizers because a number of studies have shown that excess use of Urea is not only hindering crop yield but is also a cause of soil pollution. This is fine and we need to support the FM on this noble issue. 

However, even if this is the case then the Fertilizer companies, especially those who are heavy on Urea,  need not have to worry much as India has a deficit in Urea production of around 6/7 million Metric Tones and a reduction in import will help the government in balancing BOP.  And at the same time check on the borrowings. "

2ndly, we need to understand that organic farming though has been romanticized like imparting education through Sanskrit Medium,  cannot in toto, replace the synthetic fertilizers. 

Mainly, because of logistic problems and our traditions or customs. Tell me how many farmers would like to use Pig excreta or Chicken excreta or bone meal (organic manure from crushes boner of animals) in their fields,  especially those who are traditionally vegetarians? 

2ndly, like we know the specific locations for getting inorganic manure,  most of us are not aware from where or from which source, Phosphate and Potash or Calcium come. Right? 

So, in the immediate future or in the next 2/3 the fertilizer companies who are only into the production of inorganic manure need not worry.

Now against this backdrop,  let us see what is the investment rationale of buying the scrip of National Fertilisers Ltd or NFL (Rs.25.55):

• NFL has a market cap of only Rs.1260.79 crore,  P/E of  8.44 against the Industry P/E of 12.17. A liberal P/E of 10 for this PSU mini Ratna, can take this scrip to above Rs.30.
• Its FY20, expected EPS should be around Rs.6/7. Which gives the natural target of around Rs.45/50.
• The book value of the shares of the company is Rs.45.23. This is a disinvestment Candidate and hence book value is very important, for QIP or for strategic sell. 
• It is constantly paying dividend during the last 5 years and at the current price of Rs.25.55, the dividend yield comes at 7.24%, which is more than one year saving bank interest rate. 
• NFL reported a 3% increase in its consolidated net profit at Rs.107.11 crore for the quarter ended December as against Rs.103.59 crore in Q3FY19. During the nine months (April -December 2019) of current financial year, the total fertilizers sale rose by 25% to 43.73 lakh tonnes. Hence, it has sound financials and do give us much ammunition for large investments in the shares of this company. 
• NFL, currently operates five natural gas based urea Plants, located at Nangal, Bathinda in Punjab, Panipat in Haryana and two plants at Vijaipur in Madhya Pradesh.
• Apart from making urea,  it is also into Bio Fertilizers, which means it is going to be positively affected by the FM's new initiative of "Going Green".
• The company's Chairman Mr.Mishra, in a YouTube video has said that the company would like to import the products which it doesn't manufacture and trade in India, through various channels. It is also implementing various energy saving devices in their plants according  to Mr. Mishra. 

Introduction:

NFL, a Schedule ‘A’ & a Mini Ratna (Category-I) Company, having its registered office at New Delhi was incorporated on 23^rd August 1974. Its Corporate Office is at NOIDA (U.P). It has an authorized capital of Rs. 1000 crore and a paid up capital of
Rs. 490.58 crore out of which Government of India’s share is 74.71 % and 25.29 % is held by financial institutions & others.

Manufacturing Plants:

NFL has five gas based Ammonia-Urea plants viz. Nangal & Bathinda plants in Punjab, Panipat plant in Haryana and two plants at Vijaipur at District Guna, in Madhya Pradesh.
The Panipat, Bathinda & Nangal plants were revamped for feed stock conversion from Fuel Oil to Natural Gas, an eco-friendly fuel during 2012-13 / 2013-14.
Vijaipur plants of the company were also revamped for energy savings & capacity enhancement during 2012-13, thus increasing its total annual capacity from 20.66 LMT from 17.29 LMT, an increase of 20%. The company currently has a total annual installed capacity of 35.68 LMT (Re-assessed capacity of 32.31 LMT) & is the 2^nd largest producer of Urea in the country with a share of about 16% of total Urea production in the country.

Company has a Bio-Fertilizers Plant at Vijaipur with a capacity of 600 tonnes of solid & liquid Bio-Fertilizers to produce three strains of Bio-Fertilizers viz. PSB, Rhizobium and Azotobacter are produced.

Products:

NFL is engaged in manufacturing and marketing of Neem Coated Urea, three strains of Bio-Fertilizers (solid & liquid) and other allied Industrial products like Ammonia, Nitric Acid, Ammonium Nitrate, Sodium Nitrite and Sodium Nitrate. The brand name of the company is popularly known in the market as ‘KISAN’.

The company has also started production of certified seeds under its Seeds Multiplication Program for sale under its own brand name as Kisan Beej.

Imports & Trading:

Apart from manufacturing business, the company is also expanding its business, in a consistent & phased manner, by way of imports and trading of various agro-inputs like Non-Urea Fertilizers, certified seeds, Agrochemicals, Bentonite Sulphur, City compost through its existing PAN India dealer’s network under single window concept.

Marketing setup:

NFL Marketing Network comprises of Central Marketing Office at NOIDA, three Zonal Offices at Bhopal, Lucknow & Chandigarh, 16 State & 2 UT Offices and 35 Area offices spread across the marketing territory of NFL.

The company has 10 Soil testing laboratories (6 Static & 4 Mobile) with annual capacity of testing around 65000 samples for Macro Nutrients and 10000 samples for Micro Nutrients and are fully dedicated to the testing of soil health helping farmers to facilitate balanced fertilization.

Research Centers

The company has a R&D set up at each Manufacturing Unit i.e. at Nangal, Panipat, Bathinda and Vijaipur as well as at Corporate Office (Noida) which are primarily focused and undertakes various innovation studies to develop new, efficient & safer processes, value added products and suggest implementation of energy saving schemes.

Implementation of Energy Saving Schemes:

The company has recently implemented various energy saving schemes such as Purge gas recovery plant at Vijaipur-II, hooking up of old redundant Ammonia Synthesis Converter (S-200) with New Converter (S-300) at Panipat & Bathinda Units and additional 2 nos. cooling tower cells in Urea Plant at Vijaipur-II. The company has also commissioned two roof top solar plants of 100 KW & 90 KW at Corporate Office, Noida and Bathinda Unit.

Further, in order to meet the strict energy norms fixed by GoI under New Urea Policy 2015 w.e.f. 01-04-2018, though the investment is economically unviable without suitable dispensation as sought by NFL from GoI, the company is in the process of implementing energy saving schemes i.e. Installation of Gas Turbine Generator along with Heat Recovery Steam Generation Unit at Panipat, Bathinda & Nangal Units with an estimated cost of Rs. 700 crore.

The company is also going to implement energy saving schemes at Vijaipur-I & II to further bring down the energy consumption.

New Investments:

  Bentonite Sulphur Plant of 25000 MTPA capacity at Panipat Unit with a cost of Rs. 44 crore has been commissioned on 20th December 2017  Setting up Di-nitrogen Tetroxide (N2O4) plant at Vijaipur Unit on Built Own Operate & Supply basis (BOOS) for ISRO  R&D initiative with M/s IARI, New Delhi to design & develop an applicator & logistic arrangement for application of Urea Ammonia Nitrate (UAN) which is envisaged to be manufactured at Nangal Unit.

Besides above, the company is also envisaging the following investments:

  Construction of Natural draft prilling towers at Panipat & Bathinda Units to improve Urea prill size with estimated cost of Rs. 90 crore (Rs. 45 crore each for Panipat & Bathinda Unit).  Agro Chemical plant at Bathinda for production of farm insecticides  Di-Ammonium Phosphate (DAP) plant of 10 LMT per annum along with Phosphoric Acid Plant in Algeria under buy back arrangement & in Joint Venture mode with GSFC, RCF and NMDC.   Seed processing plants at Indore, Bathinda and Panipat.

Joint venture

NFL in collaboration with M/s EIL and M/s FCIL has formed a Joint Venture (JV) Company as Ramagundam Fertilizers & Chemicals Limited (RFCL) to revive the old FCIL plant at Ramagundam. The equity participation in the joint venture is 26% each by NFL & EIL, 11% by FCIL and 11% by State Government of Telangana. This plant shall have the annual Urea capacity of 12.71 LMT. The zero date of the project is 25th September 2015 and is targeted to be completed by end of December 2018. The project is in progress.

Conclusion: National Fertilizers Limited (NFL) is a massive company and it is surprising how the shares are triaded at almost the half of Book Value. 

Buy the shares of the company for short and medium term targets of Rs. 32/41/47. There is no need to keep SL as it is an investment grade scrip. 

Market Mantra

Marg Ltd hit another buyer freeze today at Rs.16.25. The scrip has been hitting buyer freeze since the time it was recommended to the Premium Group Members. 

Today, Opto Circuits Ltd (Rs.33.20) was recommended in the morning trade to the Premium Memberes; the scrip touched Rs.34.40, intra-day. There are lot of optimism in the counter, before May 6, 2014 board meeting. Opto Circuits (India) earlier informed that a meeting of the board of directors of the company will be held on May 6, 2014 to discuss FCCB/GDR/Preferential Allotment/Private Placement/issue of Convertible Debentures offering and any other form of raising funds for OPTO Circuits (India) and/or for its Indian/Overseas subsidiaries. The company said on February 20, 2014 its Powerheart G5 automated external defibrillator received market clearance from the US drug regulator. Opto Circuits (India) is a vertically integrated multinational medical technology Group that specializes in primary, acute and critical care products for the global markets. The scrip is above its 200DEMA and 200DSMA. The Golden Cross has already taken place and therefore, both fundamentally and Chartically, all the factors look positive for the company. The scrip is all set to touch Rs.45-50, in the next few trading sessions.

Jai Balaji Industries Ltd hit another buyer freeze today, to touch Rs.17.55. The scrip was recommended around Rs.13-14 ranges, with a price target of Rs.29-32. 
Today HCC Ltd touched the 3rd target of Rs.21. The scrip was recommended in February, 2014 at Rs.12.70-12.80, with a 1st target of Rs.15, which was achived long back.
Insecticides India Ltd is consolidating around Rs.277-282, to chart out the next move. The scrip will reach Rs.320, within a few days.
Yesterday, a buy call was given in 29May_Nifty_Futures at 6730 for  a target of 6750. Today 29May_Nifty_Futures touched 6778.55, giving some money on the table to the Premium Group Members. On 30 April, 2014 too FIIs were net buyers to the tune of Rs.454.48 Cr and surprisingly DIIs were also  net buyers of Rs.6.46 Cr of Indian Securities--so the positive optimism continues in the Indian Bourses. Join the Paid Service or my recommended brokerage house/s before 15 May, 2014, as the subscription for the same is going to be increased to Rs.10, 000 per year from the existing Rs.7000 per year.

What El Nino fear! Agri stocks return upto 70% since March 

[Editor: Among the Agriculture related stocks, Insecticides India Ltd (Rs.275.65) have not much rallied from its 52-week low price of Rs.203 made on 8 November, 2013. Hence, there is a chance for more appreciation from this scrip in the coming days. I am looking at a target of Rs.400 plus in the medium term]

NEW DELH, 30 April, 2014: Shunning growing concerns over El Nino, most agri stocks have seen a massive rally since March this year.

If we look at the performance of top-five agri stocks, a big chunk of the upmove can be seen from the period starting March, with Advanta gaining over 70 per cent and UPL rallying over 50 per cent in the same period (refer to table below).

Considering that the Indian Meteorological Department (IMD) had formally accepted the possibility of El Nino and a below-normal monsoon just last week, agricultural stocks should have witnessed some bit of pressure; but the impact of a decline in the monsoon level on these companies is debatable, say analysts. 

El Nino impacts the atmosphere and increases temperature, which could further disrupt rainfalls. The Reserve Bank of India has also warned that this adversity can impact the yield, which could further trigger the inflation rate above 8.5% and may result in hiking rates further.

According to an ET report, first, for agrochemical companies, a chunk of their revenues come from exports, which hedges their exposure to domestic market.

And second, even monsoon forecasts are subject to periodic revisions. At the same time, inadequate monsoon could be good news for players in the seed or irrigation business, added the report. 

There is 40 per cent likelihood of India receiving below normal monsoon rains this year because of an El Nino phenomenon developing in the Pacific Ocean, ET reported, quoting Skymet, a Delhi-based private sector weather forecaster.

According to experts, even if bad monsoon plays the devil, the impact on economy and agri stocks will be short lived and most of the stocks have their own set of individual stories and triggers which will support them in the long term.

Sashi Krishnan, CIO, Birla Sun Life Insurance Co. Ltd is of the view that if at all we do see pressure on the consumer sectors consumer driven sector it would be very short lived because we are having some concerns in terms of a less than normal monsoon because of the EL Nino effect.

"The first impact of that will be on the consumer sector but that is going to be a very short lived sort of impact and as we go into the latter part of the year this sector should also sort of recovery," he added.

According to analysts, there is a distinct traction happening in some of the agri companies and this is quite visibile in names like Monsanto, Jain Irrigations, UPL Ltd etc. These stocks have moved sharply in the last couple of months.

"I am not very surprised with the kind of a movement which is happening into some of these Agri companies, UPL of course is a different story," said Deven Choksey, MD, K R Choksey Securities.

UPL as well as Rallis India reported results which were better than expected could be major factors contributing to the recent rally.

"Apart from better results, they (UPL) are probably talking of some major expansions into the business and that is where the larger amount of interest has once again started coming back into UPL," added Choksey. 

Choksey is of the view that Jain Irrigation have the potential for appreciating two-three times over the next two years or three time. He feels that there is lot of underlying value in many of the agri companies including Jain Irrigation and Rallies which one would cannot forget and that is where the investor interest has started coming back into the stocks.

Courtesy: The Economic Times