For generations, India’s agriculture industry has been the backbone of the country’s economy, making a substantial contribution to the country’s GDP. The country’s growing population and changing eating habits drive demand for agricultural products. Investors can profit significantly from this growing demand by exploiting the agriculture sector’s growth potential. Investors can obtain exposure to leading companies in this crucial industry by purchasing shares in India’s top agriculture stocks.
These businesses are engaged in several industries, such as farming machinery, food processing, agrochemicals, fertiliser manufacturing, crop cultivation, and seed production.
Agricultural stocks in India are listed companies on the stock market. The companies’ primary activities include farming, seed production, pesticide and fertiliser manufacturing, machinery and equipment production, and other associated activities directly or indirectly tied to India’s agriculture and related sectors.
The industry is so large that it may be further broken into seven distinct sectors, each containing 162 agricultural stocks.
Here is the list of the best agriculture stocks in India:
One of the biggest fertiliser firms in India is Coromandel International Ltd., which provides a wide variety of speciality nutrients, crop protection products, and fertilisers. The company serves a sizeable agricultural market with a solid nationwide distribution network.
Coromandel International is a manufacturing company with a strong base of operations spread across several states. Additionally, the business prioritises research and development, continuously looking for novel and environmentally friendly fertiliser solutions.
Over the previous 12 months, Bayer Crop Science generated an astounding Rs. 5,377.20 Cr in operational revenue. The company’s financial performance is notable, exhibiting a robust 9% annual revenue growth, a commendable 19% pre-tax profit, and an excellent 27% ROE.
Despite economic cycles, Bayer Crop Science typically delivers stable earnings growth and is one of the greatest agriculture stocks due to its debt-free status and excellent balance sheet position. As a result, it will rank among the top Indian agriculture companies on the stock market in 2024.
Offering a variety of fertilisers and speciality nutrients, Chambal Fertilizers and Chemicals Ltd. is a well-known player in the fertilizer market. The company serves the nation’s sizable agriculture industry with production facilities spread across several states and a strong distribution network.
Research and development and investigating novel and sustainable fertiliser solutions are Chambal Fertilisers and Chemicals Ltd’s main areas of concentration.
Agriculture company stocks have emerged as good money making options in India. Let us look at some key benefits of putting your money in agriculture companies:
Farming products often hold basic value that can fight the effects of rising prices in the country. As rates for various goods and services increase, the rates for agriculture items also tend to go up.
People being more aware of terms like saving the environment and responsible production methods is leading to higher demand for organic and eco-friendly farm items. Top agriculture export companies in India that align to these trends can see expansion.
The list of agriculture penny stocks provides investors exposure to international markets and trade patterns. This allows benefiting from both Indian and worldwide economic situations.
Putting money in farming companies supports the essential requirement of food production and contributes to solving hunger issues globally. It allows investors to have a tangible positive impact on a critical area.
The following factors need to be taken into account before purchasing the finest shares in Indian agriculture:
Firstly, the agriculture sector has a diverse mix of companies engaged in businesses like fertilisers, pesticides, seeds, plantations, farm equipment etc. Study their financials and identify sub-segments poised for growth based on rising rural incomes and food demand.
Review 2-3 years of previous sales and profit growth of shortlisted stocks to assess consistent performers across good and bad agriculture cycles. Favour firms reflecting steady operations.
The quality of top leadership and management capabilities influence plans and performance. Evaluate their industry experience; and execution track record through changing business environments and innovative efforts.
India’s rising population and food consumption expenditures offer attractive expansion possibilities in agriculture companies. To estimate growth potential, analyse upcoming opportunities, new launches, and investments planned by firms.
Overdependence on monsoons, government subsidies, volatility in commodity prices etc., pose risks for agriculture companies. Account for such uncertainties and downside scenarios while assessing expected returns.
Checking prevailing valuations using the price-to-earnings ratio also signifies whether the stock is overvalued, fairly valued, or available at a discount. Opt for reasonably priced stocks.
Firstly, as Indian agriculture is heavily monsoon dependent, adverse rains or drought-like conditions can severely hurt farm output and farmer incomes. This increases risk for companies engaged in seeds, fertilizers, pesticides etc. directly linked to rural demand.
Additionally, agriculture stocks list are vulnerable to extreme volatility in domestic and global commodity prices. Falling commodity rates can squeeze profit margins for farm input suppliers as well as plantation companies.
Agriculture being a politically sensitive sector in India, frequent regulatory changes in export-import policies, subsidies provided or taxes levied can positively or negatively impact companies. Investors must account for such uncertainties.
The spending capacity of farmers significantly influences demand. Erratic monsoons, unsupportive policy actions etc can negatively impact rural incomes and hamper growth prospects of agri input companies.
Bumper harvests sometimes outpace demand and lead to oversupply of grains, oilseeds etc. This brings down realizations quickly and eats into the bottom lines of farm producers and traders.
Global price movements of agri commodities due to various events like bumper crops, adverse weather etc also create volatility for Indian players exporting or importing goods.
The agriculture area is very important for India’s economic growth. Putting money in good agriculture companies can be a wise move for investors who want their money to increase over many years. However, doing thorough research properly is very essential before investing. One must understand all the risks fully. It is also good to put money in many other places as well, and not just agriculture. This spreads and reduces chances of loss if agriculture goes through bad times suddenly. Overall, agriculture can give good returns if selected carefully after evaluating each company properly.
Some leading agriculture stocks in India include UPL, PI Industries, Coromandel International, Rallis India, Dhanuka Agritech, etc.
Key sectors that agriculture stocks cover include fertilizers, pesticides, farm equipment, seeds, plantations, irrigation, tractors, food processing etc.
Key factors are government policies and budget allocations for agriculture, monsoons, commodity price movements, rural income and demand growth, export potential, and company fundamentals.
Agri stocks provide an effective inflation hedge as food prices usually rise with overall inflation, enabling these companies to pass on increased costs.
Key risks are adverse weather conditions like weak monsoons, government regulation changes, global commodity price fluctuations, high dependency on rural economy performance etc.
The outlook on agriculture stocks remains positive supported by increased focus on irrigation, rising exports potential, growing horticulture output, wider insurance coverage and enhanced farm credit.
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