Best Agro Chemicals Stocks to Buy in India in 2023

India, an agrarian nation where over 50% of the population depends on agriculture for their livelihood, holds a significant position in global food production. It proudly stands as the largest producer of spices, pulses, milk, tea, cashew, and jute, and is the second-largest producer of various essentials like wheat, rice, fruits, vegetables, sugarcane, cotton, and oilseeds. However, the ever-present challenge of pests, diseases, and weeds threatens food production and quality.

To safeguard crops from the detrimental impact of insects, diseases, and weeds, agrochemicals, also known as crop protection products or pesticides, play a crucial role. These agrochemicals effectively control pests, which, if left unchecked, could result in significant crop losses. It is estimated that annual crop losses would double without the use of these crop protection products. The agricultural sector in India faces tough competition from around 30,000 species of weeds, 3,000 species of nematodes, and 10,000 species of plant-eating insects.

Agro Chemicals Stocks – An Overview

Agrochemicals stand as one of the key inputs for modern agriculture, facilitating crop protection and improved yield. Presently, India holds the position of the world’s fourth-largest producer of agrochemicals, trailing behind the United States, Japan, and China. Furthermore, it has emerged as the 13th largest exporter of pesticides globally, showcasing its significance in the international market.

To ensure crop performance, higher yields, and effective pest control, agrochemicals are meticulously diluted in recommended doses and applied to seeds, soil, irrigation water, and crops. Therefore, in the current landscape, agrochemicals emerge as the most pertinent and reliable solution to enhance agricultural productivity.

As the year 2023 unfolds, it becomes crucial for investors and stakeholders to explore potential opportunities in the agrochemical sector in India. This article aims to highlight some of the best agrochemical stocks worth considering in 2023, taking into account the country’s vital position in agriculture and the increasing global demand for crop protection solutions.

In this write-up, we explore the leading agrochemical stocks available in India. Keep reading to uncover the finest choices!

Factors Considered for Selecting the best Agro Chemicals Stocks

Considering their scarcity and versatility, metals prove to be exceptional investment options. To become a prudent investor in metal stocks, one must grasp and comprehend a diverse array of distinct aspects.

We have curated the following list of top steel stocks in India based on the following factors:

1. Market Cap

We have chosen only those agro chemical companies whose market cap is greater than 5000 Crore INR

2. Price to Earning Ratio

The better a stock’s performance, the lower its price-to-earnings ratio tends to be.

3. Sales

We have selected agro chemical companies with an Average Sales Growth (3 years) of more than 10%.

4.Profit

The following list consists of Agro Chemical companies whose Average Profit growth (3 years) > 10%.

Best Agro Chemical Stocks to Buy in India

Meghmani Organics Ltd

Incorporated in 1995 as Meghmani Organics Limited, the company was originally founded in 1986 under the name M/s Gujarat Industries. With six manufacturing facilities based in Gujarat, the company specializes in the production of Pigments and Agrochemicals. It has emerged as one of the top three players globally in Phthalocyanine based pigment manufacturing and ranks among the top ten pesticide producers in India.

Meghmani Organics Ltd (MOL) focuses on manufacturing green and blue pigment products, which find applications in the production of printing ink, plastic, paints, textiles, leather, and rubber. Additionally, the company produces a diverse range of pesticides widely used in crop protection as well as non-crop applications, including insect control in wood preservation and food grain storage.

• Market Cap – ₹ 2,074 Cr.
• Current Price – ₹ 81.6
• High / Low – ₹ 136 / 75.3
• Stock P/E – 9.27
• ROE – 14.2 %

The earnings comprise an additional income of Rs. 114 Crore.

Best Agrolife Ltd

Best Agrolife, previously known as Sahyog Multibase Limited, holds a prominent position as a leading agrochemicals manufacturer in India and is ranked among the top 15 agrochemical companies in the country. This company stands out as one of the rapidly growing manufacturers of Technicals, Formulations, Intermediates, and Public Health products. In April 2018, Best Agrochem Private Limited was merged with the company, strengthening its presence in the market.

With a diverse product range, Best Agrolife offers over 70 Formulations in the form of Insecticides, Herbicides, Fungicides, and Plant Growth Regulators. These formulations are developed from active ingredients produced in-house, ensuring high-quality standards. Operating under a state-of-the-art production setup, the company caters to several esteemed blue-chip corporates and renowned multinational companies, both from India and abroad.

• Market Cap – ₹ 3,114 Cr.
• Current Price – ₹ 1,317
• High / Low – ₹ 1,775 / 856
• Stock P/E – 12.8
• ROE – 44.8 %

The company is anticipated to deliver a strong quarter. However, it is worth noting that the working capital days have witnessed an increase from 106 days to 157 days.

Heranba Industries Ltd

Heranba Industries Ltd, established in 1994, specializes in the production of a wide variety of agrochemicals, encompassing insecticides, herbicides, fungicides, and public health products used for effective pest control.

• Market Cap – ₹ 1,507 Cr.
• Current Price – ₹ 377
• High / Low – ₹ 620 / 265
• Stock P/E – 13.7
• ROE – 14.4 %

The company has an impressive track record of Return on Equity (ROE), with a noteworthy 25.0% ROE over the last three years.

Dhanuka Agritech Ltd

Dhanuka Agritech Limited stands as a prominent agri-input company in India, earning recognition from Forbes Magazine within the “200 Best under A Billion Companies in Asia Pacific” category. The company is listed on both the Bombay Stock Exchange and the National Stock Exchange of India. Notably, Dhanuka received the prestigious “Company of the Year” award in the Agro Chemical Category from the Federation of Indian Chambers of Commerce and Industry (FICCI) during the 10th Biennial International Exhibition and Conference – India Chem 2018. It continues to garner numerous accolades and honors over time, including being acknowledged as a “Great Place to Work for the year 2018-19.”

With a widespread presence across India through marketing offices in major states, Dhanuka operates three advanced manufacturing units along with 39 warehouses and a network of over 8 branch offices, catering to a vast network of 6,500 distributors and approximately 75,000 dealers. The company’s dedicated workforce of over 1,000 techno-commercial professionals, backed by a robust research and development division and an efficient distribution network, enables Dhanuka to serve around 10 million Indian farmers with its wide range of products and services.

• Market Cap – ₹ 3,439 Cr.
• Current Price – ₹ 755
• High / Low – ₹ 818 / 603
• Stock P/E – 16.0
• ROE – 21.3 %

The company has minimal debt, indicating a nearly debt-free status. However, the promoter holding has observed a decline of -4.82% over the past three years.

Sharda Cropchem Ltd

Conceived by Mr. R. V. Bubna, an adept Chemical Engineer from IIT Bombay with over 45 years of hands-on experience in the chemical industry, the enterprise took shape through his and Mrs. Sharda R. Bubna’s individual proprietorships, M/s. Sharda International in 1987 and M/s. Bubna Enterprises in 1989, respectively. The consolidation of these efforts led to the establishment of Sharda Worldwide Exports Private Limited in 2004. Having transitioned the businesses of the initial proprietorships encompassing dye, dye intermediates, pesticides, agrochemicals, and V-Belts to Sharda Worldwide Exports Private Limited on April 1, 2004, the company underwent a transformation. On September 6, 2013, it adopted the name Sharda Cropchem Private Limited, eventually becoming a publicly traded entity on September 18, 2013 under the name Sharda Cropchem Limited.

Currently, Sharda Cropchem Limited stands as a rapidly advancing global agrochemicals firm, notably holding a leading position in the generic crop protection chemicals sector. The company has achieved significant market penetration in sophisticated regions such as Europe and the US, known for their high entry barriers, and has also established a substantial foothold in other regulated markets like LATAM and the Rest of the World.

• Market Cap – ₹ 3,977 Cr.
• Current Price – ₹ 441
• High / Low – ₹ 580 / 369
• Stock P/E – 17.2
• ROE – 15.9 %

The company has successfully reduced its debt burden and is now almost debt-free. However, it is worth noting that the company has high debtors, with an average collection period of 165 days.

UPL Ltd

UPL Limited, formerly known as United Phosphorus Limited, is an Indian multinational corporation specializing in the production and distribution of agrochemicals, industrial chemicals, chemical intermediates, specialty chemicals, and pesticides. With its headquarters situated in Mumbai, Maharashtra, the company operates across both agricultural and non-agricultural sectors. The core of its revenue generation lies in the agro-business, encompassing the manufacturing and marketing of traditional agrochemical items, seeds, and other agricultural-related merchandise. The non-agro category involves the production and promotion of industrial chemicals as well as diverse non-agricultural offerings including fungicides, herbicides, insecticides, plant growth regulators, rodenticides, industrial and specialty chemicals, and nutrifeeds. UPL’s products are distributed in more than 150 countries.

United Phosphorus Limited was established on May 29, 1969.Subsequently, the company adopted the name UPL Limited in October 2013.

• Market Cap – ₹ 46,849 Cr.
• Current Price – ₹ 624
• High / Low – ₹ 807 / 613
• Stock P/E – 17.3
• ROE – 13.4 %

The company has been sustaining a sound dividend payout of 22.9%. Additionally, over the past 10 years, the median sales growth of the company has been notable at 16.1%. Moreover, it appears that the company has a comparatively low tax rate.

India Pesticides Ltd

India Pesticides Limited stands as a rapidly expanding global chemical manufacturer based in India. Founded in 1984, IPL has been a trailblazer in producing both Technicals & Formulations in Agro-Chemicals and Active Pharma Ingredients for the pharmaceutical sector.

Distinguished as the solitary Indian manufacturer and ranked among the top five manufacturers worldwide for numerous Technicals in both the Fungicides and Herbicides categories, IPL boasts a diverse portfolio of high-quality products. This, combined with value-added services, positions the company as a strategic supplier across continents, including the US, Australia, Europe, Africa, South America, and Asia.

• Market Cap – ₹ 2,493 Cr.
• Current Price – ₹ 216
• High / Low – ₹ 330 / 197
• Stock P/E – 20.9
• ROE – 20.4 %

The company has successfully decreased its debt, and it is now nearly debt-free. Additionally, over the last 5 years, the company has achieved a commendable profit growth of 34.6% CAGR. Moreover, the company boasts a remarkable track record of Return on Equity (ROE), with a 28.3% ROE over the past three years.

Bharat Rasayan Ltd

Established in 1989, Bharat Rasayan operates as a privately managed organization with manufacturing units in the vicinity of Mumbai, India. A proud member of the Shah Group of Companies, Bharat Rasayan plays a vital role in serving a diverse spectrum of industries, including Pharmaceuticals, Bulk Drugs, R&D, Petrochemicals, Flavors & Fragrances, and Specialty Chemicals. Catering to unique client requirements, the company specializes in Custom and Contract manufacturing of a wide array of compounds. Grignard Reagents, Pharma/Drug intermediates, and solvents are also regularly supplied.

The Bharat Rasayan team, guided by a family-owned legacy spanning over four decades, remains dedicated to sustaining a thriving global enterprise through the rapid introduction of innovative products. Rooted in delivering quality products and service, the company is renowned for its prompt same-day delivery of purchase and sample orders. This customer-centric approach continues to define their business ethos.

• Market Cap – ₹ 3,766 Cr.
• Current Price – ₹ 9,064
• High / Low – ₹ 12,950 / 8,280
• Stock P/E – 28.1
• ROE – 16.0 %

The company has successfully reduced its debt and is now nearly debt-free. Over the last 10 years, the company has achieved a commendable median sales growth of 21.5%. However, in the past five years, the company’s sales growth has been comparatively poor, standing at 9.27%.

Bayer CropScience Ltd

The increasing and aging global populace necessitates sufficient food availability and enhanced medical care. Through our inventive product range, we actively contribute to addressing some of the prevailing major challenges. With life expectancy on the rise, we enhance the well-being of the expanding population by directing our research and development efforts toward disease prevention, alleviation, and treatment. Moreover, our significant role lies in ensuring a steady provision of high-quality food, animal feed, and plant-derived raw materials.

Our core objective centers on generating value for our customers, shareholders, and workforce, concurrently fortifying the company’s earnings capacity. We remain steadfast in our commitment to sustainable operations and the fulfillment of social and ethical obligations. Employees fueled by a passion for innovation encounter remarkable prospects for growth within Bayer, enjoying outstanding development pathways.

• Market Cap – ₹ 20,215 Cr.
• Current Price – ₹ 4,498
• High / Low – ₹ 5,668 / 3,920
• Stock P/E – 29.8
• ROE – 25.9 %

The company has achieved a nearly debt-free status and consistently maintains a healthy dividend payout of 95.4%. Additionally, the stock is currently trading at 7.41 times its book value.

Bhagiradha Chemicals & Industries Ltd

Bhagiradha Chemicals & Industries Limited (BCIL) is a well-structured publicly listed company headquartered in Hyderabad, India, dedicated to producing premium-grade pesticides. Its manufacturing facility is situated near the eastern coastal town of Ongole, approximately 300 kilometers north of Chennai. With an annual capacity of 3250 Tonnes, the company excels in manufacturing various technical-grade insecticides, herbicides, and fungicides, both in liquid and powder formulations that adhere to global standards.

BCIL benefits from the active involvement and support of seasoned scientists and technocrats, and maintains strong ties with the scientific community through its collaboration with the Indian Institute of Chemical Technology in Hyderabad, a National Laboratory operating under the Council of Scientific and Industrial Research, Government of India. Furthermore, the company shares a unique relationship with similar pesticide enterprises located in Hyderabad, with its directors also holding positions in other such companies. This network of affiliations has offered essential stability during its formative years. The company has also achieved noteworthy export sales, serving more than a dozen countries including the USA, Brazil, UK, Portugal, Australia, South Africa, China, Germany, Malaysia, and Belgium.

• Market Cap – ₹ 1,377 Cr.
• Current Price – ₹ 1,323
• High / Low – ₹ 1,726 / 860
• Stock P/E – 29.7
• ROE – 18.4 %

The company has successfully decreased its debt burden. Additionally, over the last 5 years, the company has achieved a commendable profit growth of 46.1% CAGR. However, the promoter holding in the company is relatively low, standing at 23.5%.

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FAQs

What are the potential risks associated with investing in agrochemical stocks?

Like any investment, agrochemical stocks carry risks, such as market fluctuations, regulatory changes, and unexpected industry challenges. It’s important for investors to be aware of these risks and have a well-rounded investment strategy to manage them.

How can I stay informed about developments in the agrochemical sector?

Keeping track of financial news, industry reports, company announcements, and economic indicators can help you stay informed about the agrochemical sector’s dynamics and make informed investment decisions.

How should investors approach the selection of agrochemical stocks?

Investors should conduct thorough research, analyze financial reports, consider industry trends, and possibly seek professional financial advice before selecting agrochemical stocks. Diversifying investments and staying updated on market developments are also advisable strategies.

How can agrochemical stocks contribute to an investment portfolio?

Well-performing agrochemical stocks have the potential to provide significant returns due to the essential role of agrochemicals in agriculture. As the demand for crop protection solutions continues to rise, these stocks can offer growth opportunities in the agricultural sector.

What are the implications of reduced debt and high profit growth in agrochemical companies?

Companies that have reduced debt and demonstrate consistent profit growth often showcase financial stability and effective management. These factors can indicate sound business operations and could be attractive to investors seeking stability and potential returns.

List of Top Agro Chemical Stocks to Buy in India

Conclusion

India’s position as an agrarian country, with more than 50% of its population dependent on agriculture, makes the agrochemical sector a critical component of the nation’s economy. The country’s status as the largest producer of various agricultural products and the significant impact of pests, diseases, and weeds on food production underscore the importance of agrochemicals in enhancing crop performance and yield.

As we look ahead to the year 2023, investors seeking opportunities in the agrochemical industry should consider some key players that stand out in the market. Companies like Best Agrolife, known for their reliable crop protection solutions, and Heranba Industries, with its diverse range of agrochemical offerings, exhibit promising potential.

Moreover, the growth trajectory of India Pesticides Limited and their global presence in the agrochemical sector make them a worthy contender for investment consideration. Additionally, the consistent dividend payout and profit growth of companies like Sharda Cropchem and the impressive track record of return on equity (ROE) of other companies like Bharat Rasayan Ltd can be attractive factors for investors.

While the overall agrochemical sector in India shows promise, it is essential to consider the financial health of individual companies, debt levels, and sales growth trends. Investors should carefully analyze factors such as promoter holdings and stock valuations to make informed decisions.

In the ever-evolving landscape of the Indian agrochemical market, these top-performing companies can potentially offer lucrative opportunities for investors looking to capitalise on the growth prospects in the agricultural sector. However, it is always prudent to conduct thorough research and seek professional advice before making investment decisions to ensure optimal returns and risk management.

Author: Vedanti KiranVedanti is a female finance writer, currently pursuing her studies at Hansraj College. She has a passion for writing and travelling, and her articles on the stock market, finance, investment, and cryptocurrency are well-researched and informative. With her unique perspective on the world of finance, Vedanti is a go-to source for those seeking insights into the world of finance.