Fertiliser Stocks Rally on Wednesday as Cabinet Set to Take Up New Urea Policy

Mumbai, July 15: Fertiliser stocks were on buyers’ radar on Wednesday after a news report said the Union Cabinet will consider clearing a new urea investment policy during its meeting later in the day that would help reduce dependence on imports. The report by Business Standard that quoted “senior sources” said the Cabinet will deliberate on a slew of reforms for the urea sector at the meeting, including a new investment policy, urea norms and continuation of subsidy for FY26. 

It further added that the policy may entail guaranteed offtake buyback from new units for eight years from the date of commencement of production. Traders at home cheered the news, pushing fertiliser counters higher through the session. 

Fertiliser Stocks That Went Up Today 

National Fertilizers (NFL) advanced 1.19% to Rs 73.90, Rs 0.87 higher from its previous close of Rs 73.03 after touching an intraday high of Rs 74.57. Rashtriya Chemicals and Fertilizers (RCF) was among the top gainers in the pack, surging 2.16% to Rs 131.25 against its previous close of Rs 128.47 after hitting a high of Rs 131.77 during trade. Fertilisers and Chemicals Travancore (FACT) gained 0.87% to finish at Rs 851.70, up Rs 7.35 from Rs 844.35 previously. The stock touched an intraday high of Rs 865.25. Madhya Bharat Agro Products (MBAPL) was another mover, jumping 2.06% to Rs 126.55 from its previous close of Rs 124 as high as Rs 127.85 during trade. 

Buyers seem to have accumulated on the news that a policy announcement would provide better visibility on future capacity additions and profitability of domestic urea makers, who have been waiting for years now for clarity on the government’s vision on the fuel sector. Current producers would also likely benefit if the government ramps up production capacity from domestic sources given its intention to pare down imports of costlier urea. 

According to the report, the new policy will add almost 9 to 10 million tonnes of domestic urea-making capacity over eight years by setting up seven new units – some brownfield expansion plans while others may be greenfield projects. Each of these proposed units will have annual production capacity of around 1.27 million tonnes. Assuming conservative estimates and imported urea price of $345 per tonne, the move will enable the government to save over Rs 10,500 crore per annum on subsidies. 

The report added that the policy may invite suggestions to use ammonia as feedstock for these plants produced from coal gasification rather than imported LNG, weaning away its dependence on Gulf nations that are currently in the spotlight because of the Iran-US conflict. “India imported 26.9 million tonnes of LNG in FY25, of which 61% came from Gulf countries such as Qatar, UAE and Oman,” it quoting a recent ICRIER paper. “Close to 85% of gas used for domestic urea production is imported, mainly from the Gulf.” 

According to the report, the estimated cost of setting up greenfield units is assumed at around Rs 11,000 crore while that for brownfield expansions is put at Rs 9,000 crore based on an exchange rate of $1: Rs 90. India imports nearly 26% of its annual urea needs currently. 

Source

•  nseindia.com