Fertilizers are integral to India’s agricultural economy, where more than 90 million households depend on farming for livelihood. Fertilizers are chemical additives added to nourish the soil and increase crop yields, benefiting the farmers. Fertilizers replace chemical elements such as nitrogen, phosphorus, and potassium, which get depleted from the soil by previous crops.
Fertilizer manufacturing is a major business activity in India, with several fertilizer companies listed on stock exchanges. India is an agricultural country and, thus investing your money in fertilizer stocks can help add value to your portfolio. In this blog, we have listed the best fertilizer stocks in India by market capitalization. Read on to learn more about fertilizer stocks.
Fertilizer industry in India: A brief overview
India is an agricultural country with a growing population. There is an increasing demand for food grains and agricultural products to feed the Indian population. There is a constant need to improve agricultural yield to meet the growing demand, where fertilizers play a major role.
Fertilizers enrich the soil and help improve per-hectare agricultural yield. The Indian fertilizer industry is on a robust growth path with an expected market size of Rs. 1.32 lakh crore by 2032, with an average compounded annual growth rate of 4.2% from 2024 to 2032, according to a report by IMARC Group.
Agriculture and improving farmers’ lives is a focus area of the government. Therefore, government policies and subsidies impact the fertilizer market in India. The fertilizer industry is set to showcase steady growth over the years.
As an investor, you can put your money into listed fertilizer companies to benefit from the fertilizer industry’s growth. We have listed the top 5 fertilizer stocks in India by market capitalization. It is recommended that you conduct your research before investing in these stocks.
Top 5 fertilizer stocks in India
| No. | Name | Market Cap (in Rs. Cr) | P/E Ratio | Dividend Yield |
| 1 | FACT | 65,073 | 309 | 0.10 % |
| 2 | Coromandel International Ltd | 50,821 | 35 | 0.35 % |
| 3 | Chambal Fertilisers & Chemicals Ltd | 20,664 | 15 | 1.40 % |
| 4 | Rashtriya Chemicals & Fertilizers Ltd | 10,990 | 69.9 | 2.62 % |
| 5 | GSFC | 9,498 | 17.6 | 4.17 % |
Overview of the best fertilizer stocks in India by market capitalization
Fertilizer stocks are prone to fluctuations and volatility as they are impacted by seasonal factors such as rains and heat waves which can upset sowing activity. Additionally, fertilizer stocks are influenced by government policies such as changes in fertilizer subsidies. This makes the fertilizer sector inherently volatile.
Many of the fertilizer stocks listed in India are small- and mid-cap companies, making them even more susceptible to volatility. This makes the selection of fertilizer stocks a technical task. The best fertilizer stocks by market capitalization are listed below. These fertilizer stocks are comparatively stable and have given good returns.
1. Fertilizers & Chemicals Travancore Ltd (FACT)
Fertilizers & Chemicals Travancore Ltd (FACT), incorporated in the year 1943, is the first large-scale fertilizer plant in India located at Udyogamandal, Kochi, Kerala. The company is engaged in the manufacturing and selling of fertilizers, its by-products, and Caprolactam. The firm is under the administrative control of the Department of Fertilizers, Ministry of Chemicals & Fertilizers, Government of India.
The company produces a wide range of fertilizers like complex fertilizers (Factamfos), straight fertilizers (Ammonium Sulphate), organic fertilizers, biofertilizers, and imported fertilizers (Muriate of Potash).
2. Coromandel International Ltd
Coromandel International Ltd is one of India’s leading agri-solutions providers, offering diverse products across the farming value chain. It specializes in fertilizers, crop protein, bio-pesticides, specialty nutrients, and organic fertilizers.
The company sells various types of phosphatic fertilizers in the domestic market. It has a 40% market share in unique-grade fertilizer sales in India. Overall, it is the second largest phosphatic seller in India and the largest single super phosphate (SSP) seller, with a market share of 15%.
3. Chambal Fertilisers & Chemicals Ltd
Chambal Fertilisers & Chemicals Ltd is engaged in the production of urea. It also markets/deals in other fertilizers and agri-inputs. The firm has a joint venture for manufacturing phosphoric acid in Morocco.
It is also engaged in the marketing of other fertilizers such as Di-Ammonium Phosphate (“DAP”), Muriate of Potash (“MOP”), NPK fertilizers, Speciality Plant Nutrients, and Crop Protection Chemicals.
4. Rashtriya Chemicals & Fertilizers Ltd
Rashtriya Chemicals & Fertilizers is a public-sector undertaking (PSU) with a 75% stake owned by the government of India. The company is engaged in the manufacturing and marketing of fertilizers and industrial chemicals.
With 20 operating plants at Trombay and 5 large plants at its Thal Fertilizer Unit, the company produces Methanol, Sodium Nitrate, Sodium Nitrite, Ammonium Bicarbonate, Methylamines, Dimethylformamide (DMF) and Dimethylacetamide (DMAc).
5. Gujarat State Fertilizers & Chemicals Ltd (GSFC)
Incorporated in 1962, Gujarat State Fertilizers & Chemicals Ltd is a public sector company promoted by the Government of Gujarat. It is engaged in the manufacturing of various fertilizers and industrial products like plastics & synthetic rubbers and man-made fibers.
It primarily manufactures fertilizers and chemicals, including water-soluble fertilizers, sulfur-based products, and a range of micronutrients, plant tissue culture, growth promoters, organic compounds, and seeds.
Factors to consider before investing in fertilizer stocks in India
Here are the factors that should be considered before you invest in fertilizer companies.
Weather and on-time sowing data
Agricultural production is directly linked to weather. Favorable weather like the on-time onset of monsoon, moderate heat, and humidity can help farmers complete normal sowing before the monsoon progresses, boosting fertilizer demand. However, irregular or delayed monsoons, floods, or heatwaves can impact regular sowing activity, dampening demand for fertilizers.
Commodity Prices
When the prices of fertilizers like ammonium nitrate and urea are high, fertilizer companies make higher profits, which translates to strong stock performance. However, the opposite is also true. If the prices are low, the company’s margins will be hurt, leading to lower stock prices.
Geopolitical Risks
Consider geopolitical risks that impact fertilizer supply chains, such as trade disputes, international sanctions, or political instability in key fertilizer-producing regions.
Demand for Fertilizers
Demand for fertilizers is an underlying factor that can impact the price of fertilizer stocks. Demand can be impacted by factors such as population growth, food consumption patterns, government policies, and agricultural practices. Understanding seasonal variations in demand is also important.
Government Policies and Subsidies
Farmers, farming, and optimizing food production have been focus areas for the government for many decades. To aid farmers, the government offers subsidies on various fertilizers. It also imposes price caps and restrictions on import/export. The changes in government policies can impact profitability and hence stock prices.
Should you invest in fertilizer stocks?
Undoubtedly, the fertilizer industry is a stable segment that supports India’s agricultural ecosystem. The sector has shown positive momentum for the past few months, with prominent fertilizer stocks in the segment fetching good returns. This makes fertilizer stocks a good investment bet.
However, the fertilizer segment is cyclical and is impacted by natural elements such as heat waves and rainfall, making it volatile. Therefore, necessary steps such as research, proper risk management, and clear entry and exit strategies should be considered before investing in fertilizer stocks in India.
Conclusion
The fertilizer sector is essential to maintain the country’s food security, making it a key focus area for policymakers. The government’s efforts to improve agricultural productivity have turned the spotlight on fertilizer companies. This has led to an uptick in fertilizer stock prices, making them a good addition to investor portfolios.
