As India being an agrarian economy, the fertilizers in India which supplement the nutritional requirements of crops by increasing the nutrient content of the soil are regarded as essential elements. The fertilizer industry is highly capital intensive and in order to cope up with the farmers’ demand and to keep the prices lower, the government provides certain subsidies to them. India is the second largest consumer of fertilizers globally and at the same time it is also the third largest producer of fertilizers.
Therefore, India has both demand and supply of fertilizer in its own nation. So, in case of any global economic issue, the fertilizer companies would be the one who will be least affected by the economic shocks. Being the top consumer and the top producer of fertilizers, the country’s fertilizer industry and its market are self-sustainable and have huge growth potential.
Further in this article, we are going to discuss the 10 best stocks in the fertilizer industry and which could turn out to be a profitable investments in the near future.
10 Best Stocks in Fertilizing Industry
1. Coromandel inter
One of the top agri-solutions companies in India is Coromandel International Ltd. Along the entire farming value chain, it provides a broad range of goods and services. It focuses on organic fertilizers, specialty nutrients, bio-pesticides, crop protein, and fertilizers. It holds a dominant position in the states of Telangana and Andhra Pradesh.
| Market Cap.(cr) | 26,117 |
| Dividend yield(%) | 1.35 |
| ROE(%) | 26.6 |
| CMP(Rs) | 888 |
2. Fertilizer and Chemical Travancore
Fertilizers & Chemicals Travancore Ltd (FACT), founded in 1943, is India’s first large-scale fertilizer plant, located in Udyogamandal, Kochi, Kerala. The company manufactures and sells fertilizers, byproducts, and Caprolactam. It is administered by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Government of India.
| Market Cap.(cr) | 14,951 |
| Dividend yield(%) | 0.00 |
| ROE(%) | 9,432 |
| CMP(Rs) | 231 |
3. Chambal Fertilizers
Chambal Fertilizers mainly deal in the production of Urea, which has huge demand in the Indian farming sector. Additionally, it sells and deals in various agri-inputs and fertilizers. Additionally, it has a joint venture in Morocco that produces phosphoric acid. India fulfills 80% of its Urea requirement through domestic production.
| Market Cap.(cr) | 11,412 |
| Dividend yield(%) | 2.74 |
| ROE(%) | 26.4 |
| CMP(Rs) | 274 |
4. Krishna Phoschem Ltd
Krishna Phoschem Limited was established in 2004 and deals in the production of fertilizer and chemicals. The Ostwal Group bought the business in 2007. They operate in 10 states and hold an overall market share of 8% or more, making them the third-largest manufacturer of SSP in India.
| Market Cap.(cr) | 1,526 |
| Dividend yield(%) | 0.10 |
| ROE(%) | 16.3 |
| CMP(Rs) | 515 |
5. Madhya Bharat Agro Products Ltd
Madhya Bharat Agro Products Ltd, a subsidiary of the Ostwal Group, manufactures fertilizer and chemical products. The company produces a variety of fertilizers, including SSP, BRP, Water Soluble Fertilizers, and Phosphate Rich Organic Manure. It also manufactures Sulphur Bentonite and some value-added chemicals such as oleum.
| Market Cap.(cr) | 2,725 |
| Dividend yield(%) | 0.04 |
| ROE(%) | 32.2 |
| CMP(Rs) | 622 |
6. Mangalore Chemicals and Fertilizers Ltd
Mangalore Chemicals and Fertilizers Limited (MCF) primarily manufactures, buys, and sells fertilizers. It is a subsidiary of the Adventz Group’s Zuari Fertilizers and Chemicals Limited. The company’s manufacturing plant is located on Bangalore’s West Coast, directly across from Mangalore Port. The company has a total installed capacity of 6.74 lakh metric tonnes per year (MTPA).
| Market Cap.(cr) | 26,117 |
| Dividend yield(%) | 1.35 |
| ROE(%) | 26.6 |
| CMP(Rs) | 888 |
7. Zuari Agro Chemicals Ltd
Zuari Agro Chemicals Ltd is a company that manufactures, trades, and markets chemical fertilizers and fertilizer products.
Through its “Jai Kisaan” brand of fertilizers, the company meets the needs of farmers across the country. The company serves the southern and western parts of India, and it is the market leader in Karnataka and Maharashtra.
| Market Cap.(cr) | 573 |
| Dividend yield(%) | 0.00 |
| ROE(%) | 47.5 |
| CMP(Rs) | 136 |
8. Rashtriya Chemicals & Fertilizers Ltd
Rashtriya Chemicals & Fertilizers is a public sector undertaking (PSU) in which the Government of India owns 75%. The company is involved in the production and distribution of fertilizers and industrial chemicals. RCF produces Urea, Complex Fertilizers, Bio-fertilizers, Micronutrients, 100% water-soluble fertilizers, soil conditioners, and a variety of Industrial Chemicals.
| Market Cap.(cr) | 5,542 |
| Dividend yield(%) | 3.83 |
| ROE(%) | 16.6 |
| CMP(Rs) | 100 |
9. Madras Fertilizers
Madras Fertilizers Limited is a company that produces urea and complex fertilizers. Under the brand name ‘Vijay,’ it also manufactures biofertilizers and trades eco-friendly Agro Chemicals, Organic Manure, and City Compost. Madras Fertilizers Limited manufactures urea as well as complex fertilizers. It also produces bio-fertilizers and trades environmentally friendly Agro Chemicals, Organic Manure, and City Compost under the ‘Vijay’ brand.
| Market Cap.(cr) | 905 |
| Dividend yield(%) | 0.00 |
| ROE(%) | N/A |
| CMP(Rs) | 56.2 |
10. SPIC
Southern Petrochemicals Industries Corporation Ltd (SPIC) produces and sells urea and nitrous chemical fertiliser. Among the agricultural products offered by the company are primary nutrients, secondary nutrients, water soluble fertilizers, organic fertilizers, non-edible deoiled cake fertilizers, and bio pesticides.
| Market Cap.(cr) | 1,299 |
| Dividend yield(%) | 0.00 |
| ROE(%) | 27.1 |
| CMP(Rs) | 63.8 |
Scope of the Fertilizer industry
- Efficient Farming Operation: The fertilizer act as a cheap and effortless alternative in providing nutrition to the soil. Which ultimately improves its yield. Therefore, using fertilizer has brought efficiency in farming operations. Moreover, by improving the yield of the land it also provides a significant boost in farmers income.
- Technology: The fertilizer industry has shown significant growth in their R&D( Research and Development) Activities, most of the things in the world are now technologically oriented, the vast market and the use of fertilizer are also witnessing technological innovations in the sector.
- Government Subsidy: As fertilizers are included in the essential commodity act. And because of the high market price. The government has provided various subsidies to the farmers and have reduced the cost burden on them. This ultimately has raised demand for fertilizers as people are getting at subsidized rates.
- Increasing awareness of fertilizer among farmers: The greater the awareness, the larger will be the demand for fertilizers. People across the country are getting about this method of providing nutrition to the soil.
Final words
Investing in fertilizer companies is one way to make one’s investment sustainable. The fertilizer companies are not required to explore the overseas market to create demand for their products, as there are large areas of demand that are still untapped in the country. Therefore, the fertilizer industry in India has huge growth potential, and investing in their stocks will enable futuristic investors to be part of their growth journey.
