Companies in the agrochemicals space are expected to witness a muted July-September quarter growth due to excess Southwest Monsoon (particularly in August and September), high carryover stocks, and price pressures, said financial advisory services firm Anand Rathi in a report.
However, with improved soil moisture and water reservoir levels, the report asserted that the outlook for the upcoming Rabi season augurs well for the agrochemical companies.
“Higher carried-over stocks from last year also kept the industry cautious in terms of relentlessly pushing inventory into the market. Further, pressure on price realisation continues in domestic and global markets,” Anand Rathi said.
Anand Rathi expects revenue, EBIDTA, and profit after tax of agrochemical companies to grow 4 per cent, 7 per cent, and 35 per cent, respectively.
Domestic agrochemical companies are likely to post mid-high single-digit revenue growth in the July-September quarter, largely owing to higher-than-expected rainfall during peak sowing season hurting sprays.
On the exports side, a quarter-on-quarter recovery is likely with contribution largely coming from volumes, while prices continue to be under pressure year-on-year (though sequential recovery is seen).
Going ahead, Anand Rathi believes performance will likely improve in the second half of 2024-25.
Southwest monsoon rains in India hit a four year high this season, experiencing about 108 per cent of the long period average at 934.8 mm, data made available by the state-run weather bureau India Meteorological Department showed. A rainfall of 868.6 mm is the long period average in India.
Above-normal monsoon rains helped farmers sow more crops this Kharif season and it bodes well for the overall agriculture sector, which is the mainstay source of livelihoods for millions of Indians.
India’s Kharif crop sowing has been quite robust this season, with farmers planting crops across 1,108.57 lakh hectares so far, compared to 1,088.25 lakh hectares same period last year, marking a 1.9 per cent year-on-year increase, agricultural ministry data showed. This surpasses the average area under cultivation (or normal area of 1,096 lakh hectares) from 2018-19 to 2022-23. (ANI)
