'Nagarjuna Agrichem and Dhanuka Agritech good picks for retail investors'

In a chat with ET Now, Prakash Diwan, Head - Institutional Business, Networth Stock Broking, talks about the outlook of Aries Agro and Dhanuka Agritech.

Why do you like Aries Agro or Dhanuka Agritech?

They are just about right for a retail investor to start looking at, mainly Nagarjuna Agrichem and Dhanuka Agritech. Both of them actually are looking at fresh issuance of equity either through the FPO route or probably a QIP and significant sizes as compared to the present equity base. Both of them are very strong players in their respective areas of work, which is insecticides and herbicides. Dhanuka is North based whereas Nagarjuna is South oriented, very strong branding, very strong patents they have about 80+ products and every regularly every six months, they have been introducing new products. They are also looking at integrating themselves backward or forward respectively by getting into seed processing units. Nagarjuna is setting up an R&D centre in Hyderabad for seed processing, which is going to be a new area for them. Going forward, if you are expecting a very good agricultural output because of the kind of expectation vis-à-vis last year's debacle, these stocks along with the fertiliser stocks are likely to see very high consumption rates and they probably have very good margins as well. Once the FPO comes in, the new issuance of equity happens, the margins are strong enough. It is a great story to look at because usually retail investors do miss out on some of these sectors while building portfolios.