Fertiliser sector will be re-rated in a few months: Sudip Bandyopadhyay, Convexity Solutions

In a chat with ET Now, Sudip Bandyopadhyay, Managing Director & CEO, Convexity Solutions, shares his views on the outlook of fertilizers stocks.

There is a buzz that fertilizer companies will be reimbursed for the loss they incurred on fertilizer bonds. Do you think it is a good time to enter fertilizer counters?

Definitely, if you look at what is the government has been doing and what is very clearly going to come a nutrient based subsidy scheme has already been promulgated, it does not apply to urea yet but it definitely is encompassing the entire phosphoric fertilizer companies. So, companies that are in the phosphorus-based fertilizer manufacturing are the biggest beneficiaries of this nutrient-based subsidy scheme, which already has been launched. Hence, companies like Coromandel International, Zuari Industries, and even Tata Chemicals to an extent, are large beneficiaries of the new fertilizer policy which has been rolled out some time ago. We are also expecting urea to be covered under the nutrient-based scheme and that is yet to happen and we are hoping it to happen soon. Once this happens, fertilizer companies to a great extent will be independent of this subsidy problems and getting the reimbursement of the subsidies and waiting for the reimbursements to come and whole lot of uncertainties, they will be in a position to play by the market dynamics which is very good for these companies. We are hoping that this sector, very shortly over the next few months, should get completely re-rated and we are in for a good ride as far as fertilizer stocks are concerned. Valuations have not moved up too much in comparison to how the general market has moved up. So, it may be worthwhile looking at this sector particularly the stocks that are already beneficiaries of the new fertilizer policy.