Agri Input sector results preview for Q2FY13: Emkay

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26 Aug, 2025 12:21

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Emkay Global Financial Services has come with its September quarterly earning estimates for Agri Input & Chemicals sector. The research firm remains cautiously optimistic on the outlook for agri-input companies.

• On an aggregate basis, we expect our universe to report topline growth of 11%yoy. However, due to continuing margin pressures we expect EBITDA to decline by 3% yoy. APAT for our universe is expected to decline by 8% yoy.
• Fertiliser revenues to increase by 7% yoy driven by increase in trading volumes for GSFC & Chambal Fertilisers. 
• GNFC’s fertiliser revenues are also expected to increase by 30% yoy driven by higher urea volumes. However, we expect Coromandel’s volumes to decline by 28% yoy due to high complex fertiliser prices. Aggregate fertiliser margins for our universe are expected to decline by 280bps yoy to 9.7% due to high input costs.
• On the chemicals side, we expect chemicals revenues for our universe to increase by 21% yoy however EBIT is expected to decline by 6% yoy due to decline in margins. Steep increase in ammonia & propylene costs have impacted Deepak’s chemicals margins (down by 210bps yoy to 20.0%) while GSFC’s margins are expected to decline (1300bps yoy) due to decline in spreads. GNFC’s margins are expected to remain weak due to pressure on realizations. Emkay Chemicals Index increased by 8% yoy during July/Aug’12 due to increase in prices for key chemicals however rupee depreciation has impacted costs.
• Agri-inputs consumption has remained under pressure over the last couple of quarters due to farmers’ strained cash flow position. This was further exacerbated by deficient monsoons during July/Aug ’12 which impacted sowing patterns. However, with the improvement in monsoons we expect agri-inputs consumption to have improved.
• Initial apprehensions regarding the impact of deficient monsoons on rabi have subsided after pickup in monsoons during Sep’12. Current year's storage is nearly 87 % of last year's storage and 106 % of the average of last ten years.
• We remain cautiously optimistic on the outlook for agri-input companies. Improved rabi outlook, favorable base effect & the pick up in monsoons are likely to result in better performance from H2FY13. Tata Chemicals & Deepak Fertiliser remain our top picks due to attractive valuations.