The agrochemicals sector is expected to experience limited growth in the July-September quarter, according to Anand Rathi.

New Delhi [India], October 8: Companies in the agrochemicals sector are anticipated to experience limited growth in the July-September quarter due to excessive Southwest Monsoon rainfall (especially in August and September), high carryover stocks, and pricing pressures, as stated in a report by financial advisory firm Anand Rathi.

However, the report noted that improved soil moisture and water reservoir levels bode well for agrochemical companies in the upcoming Rabi season.

Anand Rathi explained, "The higher carryover stocks from last year have kept the industry cautious about pushing inventory into the market aggressively. Additionally, price realization continues to be under pressure in both domestic and global markets."

The firm expects revenue, EBIDTA, and profit after tax for agrochemical companies to grow by 4 percent, 7 percent, and 35 percent, respectively.

Domestic agrochemical firms are likely to report mid- to high single-digit revenue growth in the July-September quarter, primarily due to higher-than-expected rainfall during the peak sowing season, which has negatively impacted sprays.

On the exports front, a quarter-on-quarter recovery is expected, primarily driven by volume contributions, although prices are still facing year-on-year pressure (albeit with some sequential recovery).

Looking ahead, Anand Rathi anticipates that performance will improve in the second half of 2024-25.

This season, the Southwest monsoon in India reached a four-year high, recording approximately 108 percent of the long-period average at 934.8 mm, according to data from the state-run India Meteorological Department. The long-period average rainfall for India is 868.6 mm.

The above-normal monsoon rains have enabled farmers to sow more crops this Kharif season, which is beneficial for the overall agricultural sector—a critical source of livelihood for millions of Indians.

India's Kharif crop sowing has been strong this season, with farmers planting crops across 1,108.57 lakh hectares so far, compared to 1,088.25 lakh hectares during the same period last year, reflecting a 1.9 percent year-on-year increase, as reported by agricultural ministry data. This exceeds the average area under cultivation (the normal area of 1,096 lakh hectares) from 2018-19 to 2022-23.