The 48,000-crore Agrochemical sector is expected to show ‘positive’ revenue growth in the first quarter of the current fiscal year.
Strong demand for agrochemical products in both domestic and overseas markets is one of the main reasons why industry analysts predict positive growth in the first quarter.
According to Varshit Shah, an analyst with research firm Emkay Globa, ‘strong demand in the export industry and increased global commodity prices will support revenue growth in the quarter.’
In a survey of the enterprises covered by the firm, he stated that all agrochemical companies passed on the impact of increasing raw material prices to customers in the third quarter. “We anticipate 10.8 percent year-on-year growth for agrochemical firms in our coverage,’ he said.
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The growth that is positive
However, Insecticides (India) Limited Managing Director Rajesh Aggarwal believes that the industry will struggle to reach double-digit growth in the third quarter.
‘It will be a difficult first quarter for the industry to achieve it, but I can predict that it will be a positive first quarter. Agro-chemical products are in high demand in both domestic and foreign markets,’ he stated.
The first quarter, according to Kalyan Goswami, Director-General of the Agro Chem Federation of India (ACFI), could be an ‘average quarter’ for the business.
‘Sales and consumption have failed to take up as a result of previous advance sales and a delayed rainfall. We anticipate a pick-up in precipitation in the second week of July, stimulating demand in the second quarter,’ he added.
‘We are certain that the current Kharif season will show an increase in sales and consumption of agricultural inputs,’ he said.
Difficulties
The Emkay Global report, on the other hand, highlighted a few critical issues that must be properly monitored. ‘Freight costs continued to rise as a result of container shortages and a backlog of clearance as a result of the Suez Canal blockage,’ it stated.
‘The major items to watch for in first-quarter earnings are freight cost stabilization, cooling off in critical intermediates and other raw materials, and likely pricing increases to compensate for growing packaging and freight costs,’ it said.
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