Agriculture share price target

The sowing of Rabi crops touched a record high, despite demonetisation. The area sowed touched ~65mn hectares ( 6% YoY), led by wheat ( 7%), pulses ( 11%) and oilseeds ( 6%). However, the failure of the North-East monsoons in the country in the last two years has resulted in a drought-like situation in parts of Tamil Nadu, Karnataka, AP and Telangana.

Global milk production grew at a CAGR of 2.3% during 2010-2014 to reach 792.0 million metric tones (MMT) in 2014, on the back of population growth, rising disposable incomes, favorable demographics, brand awareness, increasing urbanization & westernization of diets in emerging economies, particularly India and China. During the period 2015E-2020E, global production of Milk and Dairy products is expected to grow at a CAGR of 2.1% to reach 901.2 MMT by 2020E. Milk and Milk products production is expected to increase in India at a CAGR of 4.2% over the period of...

Citing a drop in global raw material prices, the Central government has announced that PSUs (RCF and NFL) are reducing farmgate prices of complex fertilisers with immediate effect. MOP prices will be reduced by Rs 5k/t to ~Rs 11k/t, DAP by Rs 2.5k/t to ~Rs 22k/t and NPK by ~Rs 1k/t. The cut is despite a reduction in subsidies for complex fertilisers for FY17. NBS rates for nitrogen/phosphorus have been slashed by 24/29% YoY, whereas potash subsidies are flat.

IMD has forecasted an above normal monsoon at 106% +/ 5% for 2016, in line with Skymet.Higher probability (94%) is assigned to normalexcess rainfall. IMD has an expectation of normal monsoon in June and abovenormal in AugustSeptember 2016. El...

The Cabinet Committee on Economic Affairs (CCEA) approved the NBS rates for complex fertilisers for FY17. There is a sharp cut in subsidies for nitrogen (-24% YoY) and phosphorus (-29%). Potash subsidies are flat, whereas there is a 22% increase for sulphur (a micro-nutrient used in small quantity). The cut was expected owing to falling international prices of fertilisers and raw materials (refer to our report Make-or-break budget).

Meteorological models of various agencies (global and local) are pointing to a normal monsoon in FY17. Our analysis of the long-term historical trend of monsoon and agrigrowth suggests that after a deficient monsoon year, the average agri-GDP (real) growth in a normal monsoon is 8.7%. While the Indian economy has been moving away from...

Meteorological models of various agencies (global and local) are pointing to a normal monsoon in FY17. Our analysis of the long-term historical trend of monsoon and agrigrowth suggests that after a deficient monsoon year, the average agri-GDP (real) growth in a normal monsoon is 8.7%. While the Indian economy has been moving away from...

The past four years (FY13-16E) have been depressing for the Indian fertiliser sector. Global (higher international RM prices, volatile currency) and local (excess channel inventory, high subsidy receivables and policy paralysis) factors have led to earnings contraction and sector de-rating. Two consecutive years of weak monsoons have added to its woes.

Falling gas costs will cut the fertiliser subsidy bill: For domestic fertiliser companies, gas priceshavebeenfallingsinceApril2015,eversinceCCEAdecidedtopooldomesticgasprice withLNGandmakegaspricesuniformforthesector.Inlinewithenergycosts,domesticgas...

We met ProfessorRameshChand, recentlyappointed Member Agriculture, NITI Aayog (thegovernment'sthinktankwingonagripolicy)togethisperspectiveonchallengesthat Indianagriculturefacesandhisstrategiesforgivingmomentumtothisdistressedsector....