Fer­tiliser Cos Soar on Talk of Early Start to DBT Plan

An­a­lysts say the in­tro­duc­tion of DBT will be sig­nif­i­cant for firms, such as Coro­man­del In­ter­na­tional, which have wide re­tailer net­works

The Economic Times - - Smart -

Mumbai: Shares of fer­tiliser com­pa­nies were in fo­cus on Wed­nes­day, ris­ing up to 11%, as in­vestors cheered the progress in the gov­ern­ment’s di­rect ben­e­fit trans­fer (DBT) scheme. An­a­lysts said the pos­si­bil­ity of a faster-than-ex­pected roll­out of the scheme may have bol­stered shares on Wed­nes­day. Man­sukh L Man­daviya, min­is­ter of state for fer­tilis­ers, had in­formed the Lok Sabha on Tues­day that al­most two lakh point-of-sale (POS) ma­chines have been in­stalled across the coun­try to roll out the DBT of fer­tiliser sub­si­dies by March 31, 2018.

Shares of Rashtriya Chem­i­cals and Fer­til­iz­ers closed 10% higher at ₹ 97, Na­gar­juna Fer­til­iz­ers and Chem­i­cals closed 9.95% higher at ₹ 15.25, while Coro­man­del In­ter­na­tional closed 0.96% higher at ₹ 450.75. “The gov­ern­ment may be look­ing to roll out the scheme ear­lier than ex-

DBT sys­tem, sub­sidy on fer­tilis­ers will be re­leased to com­pa­nies on the ba­sis of ac­tual sales made by the re­tail­ers to the farm­ers

is ex­pected to re­quire end-to-end sup­ply chain man­age­ment and last-mile reach de­mand for fer­tilis­ers dur­ing the first half of 2017-18 to see re­cov­ery

pected. As with other agri schemes, there’s a sense of ur­gency to en­sure that the DBT is in place in ad­vance of the next agri­cul­tural cy­cle. It could be rolled out within the next nine-twelve months.” said Dhanan­jay Sinha, head-in­sti­tu­tional re­search, Emkay Global Fi­nan­cial Ser­vices. “The scheme will help com­pa­nies re­duce the stress in their work­ing cap­i­tals as re­ceiv­ables from the gov­ern­ment will

come at a faster pace.”

An­a­lysts said the in­tro­duc­tion of the DBT will be sig­nif­i­cant for com­pa­nies with wide re­tailer net­works like Coro­man­del In­ter­na­tional. “Once im­ple­mented, it (DBT) will sig­nif­i­cantly ease the sub­sidy re­ceiv­ables sit­u­a­tion for Coro­man­del In­ter­na­tional. DBT roll­out is ex­pected to re­quire end-to-end sup­ply chain man­age­ment and last-mile reach, both of which will ben­e­fit CRIN on ac­count of the strong brand pull,” a note by Moti­lal Oswal said.

An­a­lysts ex­pect de­mand for fer­tilis­ers dur­ing the first half of 2017-18 to wit­ness a good re­cov­ery. The progress of mon­soon could also mean higher kharif sow­ing, but some have warned that shares have run-up far ahead of their fun­da­men­tals.

“Shares of fer­tilis­ers have seen a big run-up in the last few months but the time is ripe for profit-book­ing. I am, how­ever, bullish on Na­gar­juna Fer­til­iz­ers. If its ac­qui­si­tion by Coro­man­del goes through it could be a po­ten­tial multi-bag­ger. In the fer­til­izer in­dus­try, we have seen many ap­pre­ci­a­tions between Zuari Group and Mu r u g a p p a G r o u p through Coro­man­del, so in t hat s e nse Na­gar­juna could turn out to be a good long-term bet,” said G Chokkalingam, founder & MD, Equinomics Re­search & Ad­vi­sory. Zuari Agro Chem­i­cals c u r r e n t l y h a s a 5 % s t a ke in Na­gar­juna Fer­til­iz­ers.

UN­DER THE DBT ROLL­OUT AN­A­LYSTS EX­PECT

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