Navin Fluorine, SRF, PI Industries surge up to 6% as earnings downgrade cycle largely behind

Agrochemical stocks including the likes of PI Industries, SRF, Navin Fluorine, Atul Ltd. are in focus in Thursday’s trade (June  20) as according to Zee Business research desk there are initial signs of turnaround in the segment.

At the last count, shares of Atul Ltd. and SRF traded higher by over 2 per cent each at Rs 6,374.45 and Rs 2,471.15, while Navin Fluorine traded with gains of nearly 4 per cent at Rs 3,767 and PI Industries was up nearly 3 per cent at Rs 3746.45. 

The desk added that demand for agrochemicals is stable in the country with inventory levels now lower than usual. Furthermore, the US-based agrochemical companies have given indications of outsourcing, which is deemed as positive for Indian players.

The sector as a whole has witnessed an earnings downgrade in the last 18 months, nonetheless with revival in the offing, annual EPS growth of 25 per cent is foreseen in the next 3 years. So accordingly, brokerages believe that the downgrade cycle of the sector is now behind them. Furthermore, earnings upgrade for the sector is expected on better-than-estimated volume growth.

Exposure of different players in agrochemicals

For Atul, as much as 13 per cent of the total income comes from crop protection, likewise, in the case of Navin Fluorine over 25 per cent of the company’s revenue is contributed by the specialty chemicals segment. Furthermore, for SRF, 26.5 per cent of the revenue is accounted for by the agrochemicals.