Budget 2023: Why agri stocks are in focus prior to Budget

Budget 2023: As India approaches the presentation of the Union Budget in Parliament on February 1, all eyes are on the country's agriculture sector for any changes in terms of allocation and subsidy. According to experts, agriculture is likely to be a top priority in the Union Budget for 2023-24. 

The global food grain crisis has shown how important the Indian agrarian economy is, said Urvi Shah, Research Analyst at SAMCO Securities. “The sector is expected to be on the high-priority list of the finance minister in this Budget with allocation to irrigation, seed quality and availability, and agritech, among others," she said. 

"With the Indian fiscal account weighing down, the fertiliser subsidy is likely to remain flat or see a cut,” Shah added. 

Vinit Bolinjkar, Head of Research at Ventura Securities, is of the view that being the first normal Budget since the pandemic, the government should not reduce the allocation and subsidies in its Budget for the coming financial year. 

According to Bolinjkar, the allocation of Budget to improve crop production efficiency and enhancement of the supply chain is expected to benefit farmers, which could improve the productivity of the agriculture sector.

Also Read: Budget 2023: Why investors should keep an eye on railway stocks ahead of Union Budget 

What experts suggest 

According to experts, the allocation in the Budget 2023 will benefit agrochemical companies.

“Stocks of fertiliser and other agrochemical companies having exposure to nitrogen and urea will be among the key beneficiaries. The allocation and subsidy will aid in a higher crop yield,” said SAMCO Securities’ Shah. 

According to the brokerage, UPL, Bayer CropScience and Coromandel International are some of the stocks that should be on investors' watch-list.

“Higher allocation towards agriculture and fertiliser will significantly increase the offtake of fertilisers/agrochemicals and enhance the revenue performance of companies,” said Ventura Securities' Bolinjkar.

Also Read : Budget 2023: Private fertiliser companies likely to benefit big soon. Here's why

Ventura Securities believes the following stocks could benefit from the allocation:

1. Meghmani Organics

2. BASF India 

3. Bayer Cropsciences 

4. Bulk chemical manufacturers and urea producers for fertiliser companies, mostly from the MSME space 

According to SAMCO Securities, high inflation has impacted businesses lately. However, with the input prices cooling off and the expected push from the government in the forthcoming Budget, one can expect the sector to become more attractive from an investment perspective.

Ventura is positive on fertiliser stocks. The government is targeting to improve crop yields and productivity, which is only possible with better fertilisers, according to the brokerage.  

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