Emkay expects Agri-Chemicals topline to de-growth by 4%
Emkay Global Financial Services has come with its June quarterly earning estimates for agri input and chemicals sector. The research firm expects topline de-growth of 4% yoy and APAT de-growth of 15% yoy for Q1FY13.
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Emkay expects Agri-Chemicals topline to de-growth by 4%
Emkay Global Financial Services has come with its June quarterly earning estimates for agri input and chemicals sector. The research firm expects topline de-growth of 4% yoy and APAT de-growth of 15% yoy for Q1FY13.
Like this story, share it with millions of investors on M3
Emkay expects Agri-Chemicals topline to de-growth by 4%
Emkay Global Financial Services has come with its June quarterly earning estimates for agri input and chemicals sector. The research firm expects topline de-growth of 4% yoy and APAT de-growth of 15% yoy for Q1FY13.
Emkay Global Financial Services has come with its June quarterly earning estimates for agri input and chemicals sector. The research firm expects topline de-growth of 4% yoy and APAT de-growth of 15% yoy for Q1FY13.
On an aggregate basis, we expect our universe to report topline degrowth of 4%yoy and APAT degrowth of 15%yoy for Q1FY13. This is the first instance in last several quarters that we expect aggregate topline to witness degrowth.
Fertiliser revenues for our universe are expected to decline by 17% yoy while we expect margins to decline by 160bps yoy to 9.8%. Decontrolled fertiliser sales (includes DAP, MOP and other NPK fertiliser) declined by 14%yoy to 2mn mt in Apr - May 2012 while urea sales volumes have declined by 1% during Apr- May.
On the chemicals side, we expect chemicals revenues for our universe to increase by 16% (mainly driven by price increase) while margins are expected to decline by 600bps yoy (largely due to contraction in GSFC’s margins). Emkay Chemical Index indicates increase in chemical prices by 7% yoy
Sharp increase in the prices of complex fertilizer by 15-30% mainly driven by currency depreciation is likely to impact consumption of complex fertilisers further. Though Q1FY13 is likely to be a muted quarter since companies have already pushed huge inventory into the system in Q4FY12, however the impact might be sharper in Q2FY13 as lower cost stock moves out of system and farmers have to bear with increased prices.
Currency depreciation of 20-25% has pushed input costs for agrochemicals higher since approx. 50-55% of the raw material is imported. As a result pesticide companies have taken price increase of 8-10% across the products.
Though govt has raised MSPs of key crops for the ensuing kharif season to counter the rising costs of farmers, however huge grain supply in the system would act as a hindrance for the effective implementation of new MSPs.
We maintain our cautious outlook on the sector. Deepak Fertiliser & Tata Chemicals remain our top picks in the agri space due to attractive valuations.
