Profit-taking hits fertiliser stocks despite proposal on GST exemption

Last week, fertiliser stocks including state-run National Fertilisers (NFL), Chambal Fertilisers, RCF and others zoomed up to 20 percent.

Fertiliser stocks fell into the red in the opening trade on June 24, despite the the GST Council proposing to exempt the fertiliser sector from GST.

On June 22, the GST Council has referred a proposal to exempt the fertiliser sector from the current 5 percent GST to the Group of Ministers on rate rationalisation.

On June 22, the committee suggested lowering GST rates on fertilizers and their raw materials to aid manufacturers and farmers. Currently, fertilizers are taxed at 5 percent, while raw materials like Sulphuric Acid and Ammonia are taxed at 18 percent.

However, the markets had already factored in the proposal based on news reports earlier this month. Therefore, the stocks are falling as investors take some profits off the table.

At 9.30 am, Chambal Fertilisers and Chemicals slipped 1.2 percent, while RCF, National Fertilizers and Gujarat State Fertilizers shares fell around 5.5 percent each.

Deepak Fertilisers, Madras Fertilizers, Coromandel International and Gujarat State Fertilizers and Chemicals were also trading with sharp cuts.

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Last week, fertiliser stocks including state-run National Fertilisers (NFL), Chambal Fertilisers, RCF and others zoomed up to 20 percent. The gains were boosted by reports of a proposal to remove Goods and Services Tax (GST) on the fertilisers.

Earlier discussions in the GST Council's 45th and 47th meetings in September 2021 and June 2022 considered further rate reductions for fertilizers, but no changes were made.