Agriculture share price target

Amid continued increase in Covid cases and with most activity indicators now losing momentum

Strong underlying demand aided +20% growth in domestic business for many agrochemical companies (India business growth- BYRCS- 29%, DAGRI- 70%, PI- 49%, UPL- 27%). The aggregate industry topline growth for our coverage universe @ 13.6% YoY ex-off UPL (incl UPL @ 5.3% growth) was dragged by GOAGRO (-8%), SUMICHEM (+4%) and RALI (+6%). Healthy growth...

Carbofuron, Propiconazole, Thiophinate Methyl) on Paddy crop to reduce market size of these molecules (including combination molecules) is expected to be ~Rs 2.5-4.0 bn in Punjab. We don't expect any impact of the ban on financials of any company as (1) Ban is restricted to only 1 crop in 1...

We are increasing our topline/ EBITDA/ APAT estimates by 4%18%/22% for FY21 & 4%/9%/1% for FY22 respectively; rolling forward to Sept'22 earnings and upgrade the stock to ACCUMULATE (from Sell) with revised target price of Rs 513 (previous Rs 461) based on SoTP (Table in Exhibit 1). GOAGRO's results were significantly ahead of our estimates driven by robust performance from Astec Lifesciences (Topline up 45%), better than expected profitability in the Animal Feed segment (Margins up 164 bps YoY) and...

With sharp run up in stock price without material improvement in underlying earnings, we downgrade GOAGRO to SELL (from Buy). For BYRCS (Buy), DAGRI (Buy), RALI (Buy), SHCR (Accumulate) we are maintaining our rating (despite sharp run up in stock price) due to earnings upgrade risk in FY21 given robust demand outlook, hence we will review our rating post Q1 results. Maintain HOLD on SUMICHEM and BUY on INST & UPLL. We have put PI Ind UNDER REVIEW, awaiting further clarity on utilisation on QIP fund raising. Herbicide sales to see exponential growth in Punjab due to switch to Direct...

With sharp run up in stock price without material improvement in underlying earnings, we downgrade GOAGRO to SELL (from Buy). For BYRCS (Buy), DAGRI (Buy), RALI (Buy), SHCR (Accumulate) we are maintaining our rating (despite sharp run up in stock price) due to earnings upgrade risk in FY21 given robust demand outlook, hence we will review our rating post Q1 results. Maintain HOLD on SUMICHEM and BUY on INST & UPLL. We have put PI Ind UNDER REVIEW, awaiting further clarity on utilisation on QIP fund raising. Herbicide sales to see exponential growth in Punjab due to switch to Direct...

30 June 2020 Since resumption of operations, M&M; is seeing good on-ground momentum in its key business of tractors as well as for products like Bolero and Scorpio. According to the management, its internal index for rural spend has been at the highest level for many quarters. It is driven by (a) unusually strong water reservoir levels, (b) good Rabi crop, and (c) expectation of normal monsoons. Demand in Jun20 is higher than last year. With one of the highest exposures to rural markets (~65% of volumes), M&M; is well positioned to benefit from rural recovery considering its dominance in tractor/LCV business. According to our estimates, rural markets should contribute ~63% to M&Ms; revenues and 81% to core PAT in FY22E. With faster rural recovery, tractor volumes are expected to be flat in FY21E compared to the 20% expected decline in the auto segment. This should result in higher revenue contribution from FES 38.4% in FY21E (v/s 34.

Industry sales up 16% YoY in December driven by Urea (+14% YoY), DAP (+24%) and NPK (35%). Total Industry volume is up 16% to 5.9 mn tons. Urea/NPK/DAP sales are @ 3.9 mn tons/0.95 mn tons/0.7 mn tons. SSP volumes grew 10% to 0.3 mn tons. Domestic manufacturing sales are up...