CEO, Epic Research
There is still long unfolding that is going to happen in fertiliser stocks
Are fertiliser stocks overvalued?
Yes, since there has been reduction in GST rates on fertilizer stocks from 12% to 5%, huge unwinding is seen in price in terms of valuations. Most of them are trading near or above their all-time highs, clearly showing the huge buying interest. Mostly stocks have given a bullish rally since then, though trading near previous all-time highs can trigger some kind of major correction. As far as valuations are concerned, we are already seeing a lot of liquidity coming into the market, leaving no sector untouched in terms of undervaluation and that is what a bullish market has. So, at this point, any justified correction of 5-10% in the short term can be seen, while there is still a long unfolding that is going to happen.
What is your outlook on fertiliser stocks?
We believe the trend to continue in the near term, with prices trading near all-time highs. Few of the stocks have already breached all-time highs and have given breakouts like Chambal Fertilizer and Gujarat State Fertilizers, along with Coromandal International as well. Since the breakout has happened after a prolonged period of consolidation, we believe any correction over the short term in the stocks will be an opportunity to add to portfolio for a longer period of time. One can look at Chambal Fertilizer where the previous top of around ₹125-120 will be acting as a fresh base for positional traders with upside possibility of 20-30%, while Coromandal International is an outperformer with much higher possibility to reach ₹520 level.