The Union Budget 2019 saw fertiliser stocks under pressure as the government proposed ‘“zero budget natural farming”. This is a set of farming method where naturally available materials like cow dung and urine , jaggery and pulse flour are used instead of chemical and fertilisers. As the name implies , the cost of growing and harvesting plants is zero. Our country requires a robust and modernised agriculture sector to ensure food security for its nearly 1.2 billion population and in order to meet food grain requirements, agricultural productivity and growth have to be sustained and improved further. Hence , it is imperative to manage fertiliser productivity for a higher food production. Chambal Fertilisers and Chemicals Ltd. accounts for nearly 15% of the total urea produced in the country. For more than two decades , the company has diligently contributed to the food security of the country. Its three nitrogenous fertiliser (urea) plants are located in Kota, Rajasthan. The three plants have an installed annual production capacity of about 3.4 million MT of urea contributing to major chunks of urea consumed in leading agri states in India. One of the fertiliser unit commissioned recently in Gadepaon is among the most efficient plants in the world and uses the latest technologies from KBR, USA and Toyo Engineering Corporation, Japan. The new plant has an installed annual production capacity of about 1.4 million MT of urea. The Company has donned the mantle of providing all agri-products through a “single window” to enable the farmer to buy all products from one source. It provides urea and other agri-inputs like DAP (Di-Ammonium Phosphate), MOP (Murate of Potash), SSP (Single Super Phosphate), pesticides and seeds. Most of these products are sold under the “Uttam” umbrella brand and have attained a leadership position in the pesticide business in North India. To promote sustainable farming practices, Chambal Fertilisers has a well-structured farmer advisory programme. Under this programme, the company organises crop seminars, product and field demonstrations and farmer meets. Soil and water analysis is also conducted for free at Chambal’s laboratories and based on the results, experts emphasise on balanced use of fertilisers. To encourage the new age farmer, the company provides information on the weather, suitable cropping techniques and queries raised by farmers. Unemployed youth from villages are trained in the latest farming techniques to provide specialised services to the farmers. The company reported excellent Q1FY20 financial results with net sales at Rs 2,854 crores up by 30.33% from Rs 2,190 crores for the same period of last fiscal while the net profit stood at Rs 235 crores up by 51.82% from Rs 155 crores as of last year. Analysts have pointed out that historically fertiliser stocks become quite active during the month of September and October and hence we are bullish on Chambal Fertiliser stock quoting at Rs 158 on the Indian stock exchanges. The Chambal stock can be bought by portfolio investors for a 15% price appreciation in the next six months time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.