Top 5 Agricultural Stocks to Watch in 2024: Riding the Wave of Policy Support and Innovation

With the onset of the monsoon and the newly formed Modi government, agriculture stocks have garnered significant attention. The sector is expected to benefit from policy support and favorable weather conditions. Prime Minister Narendra Modi, who began his third term on June 10, 2024, has already taken significant steps to support farmers, including releasing the 17th installment of the PM Kisan Nidhi, benefiting 93 million farmers with Rs 200 billion. This move underlines the government’s commitment to farmer welfare and the broader agricultural sector.

The new government's action plan aims to achieve self-sufficiency in agricultural products, enhance export quality, and alleviate farmer distress. This includes ensuring farmers have access to high-quality seeds, fertilizers, and other essential inputs to boost productivity and economic well-being.

Here are five agricultural stocks that could lead the sector in 2024:

1. Coromandel International

Coromandel International is a leading agri-solutions provider in India, operating in nutrient and allied businesses and crop protection. The company offers fertilizers, crop protection products, bioproducts, specialty nutrients, and organic products. It operates over 750 rural retail outlets across Andhra Pradesh, Telangana, and Karnataka, providing services such as crop advisory, soil testing, and farm mechanization to approximately 3 million farmers.

Despite a challenging year marked by sub-normal monsoons and lower reservoir levels, Coromandel has shown resilience. The company posted a total income of Rs 222.9 billion for the year ended March 31, 2024, down from Rs 297.9 billion the previous year, and a Profit After Tax (PAT) of Rs 164 billion, a decline of 18.4%.

Coromandel plans to invest Rs 12-15 billion in FY25 to explore new chemistries like fluorination chemistry for its crop protection and specialty chemicals business. The retail business aims to expand into new markets by opening 100 new stores in FY25. The company also continues to scale up its drone spraying services, covering 25,000 acres during the year.

2. Sumitomo Chemicals India

Sumitomo Chemical India Ltd (SCIL) is a key player in the agrochemical industry, offering a balanced portfolio of technical and formulation products. The company is known for marketing proprietary products from its Japanese parent company in agrochemicals, animal nutrition, and environmental health segments. SCIL operates in agrochemicals and other segments related to environmental health and animal nutrition, producing various technical-grade pesticides.

In FY24, SCIL introduced several new proprietary products, including herbicides, insecticides, and fungicides. The company is expanding its manufacturing capabilities with a new 20-acre site in Bhavnagar and a 50-acre site in Dahej, which will house state-of-the-art manufacturing facilities within the next 2-3 years. Despite a 26% decline in net profit to Rs 3.6 billion and a 17% drop in total income to Rs 29.3 billion in FY24, SCIL remains debt-free with a strong balance sheet, positioning it well for future growth.

3. Godrej Agrovet

Godrej Agrovet is a diversified, research and development-focused agribusiness company. It operates in animal feed, crop protection, oil palm, dairy, and poultry businesses. The company’s innovation-driven approach and strong market presence make it a formidable player in the agricultural sector.

Godrej Agrovet has been expanding its product portfolio and market reach. Its crop protection segment has shown significant growth, driven by new product launches and market expansion efforts. The company is also investing in precision farming technologies and sustainable agricultural practices to enhance productivity and reduce environmental impact.

4. Bayer CropScience

Bayer CropScience is a global leader in agricultural science and innovation, providing a wide range of products and services to farmers. The company focuses on crop protection, seeds, and environmental science. Bayer’s commitment to research and development has resulted in a robust pipeline of innovative products aimed at improving crop yields and sustainability.

In India, Bayer CropScience has been actively promoting integrated pest management and sustainable farming practices. The company’s extensive product portfolio and strong distribution network position it well to capitalize on the growing demand for high-quality agricultural inputs.

5. UPL Limited

UPL Limited is a leading global provider of crop protection solutions, offering a comprehensive portfolio of products and services. The company is known for its innovative approach to agricultural sustainability and its strong presence in emerging markets. UPL’s diverse product range includes herbicides, insecticides, fungicides, and plant growth regulators.

UPL has been expanding its global footprint through strategic acquisitions and partnerships. The company’s focus on research and development has led to the introduction of several new products that address the evolving needs of farmers. UPL’s strong financial performance and commitment to sustainability make it a top pick in the agricultural sector.

In Conclusion, Investing in agricultural stocks can be a prudent choice, given the sector’s potential for growth and the supportive policy environment. Companies that invest in research and development, adopt new technologies, and have a diversified product portfolio are better positioned to capitalize on opportunities and mitigate risks.

Before investing, it is essential to consider the benefits, risks, and growth prospects of agricultural stocks. The stocks mentioned above represent some of the leading players in the sector, poised to benefit from favorable market conditions and government support.

Disclaimer: The views above are only for educational purposes. We advise investors to check with certified experts before making any investment decisions.