The Southwest monsoon has shifted the focus to India’s agriculture and allied sector. As per data, India had received 219.4 mm of rainfall till July 12, compared to the normal 266.9 mm. The rain deficit has now widened to 18 per cent, after a strong revival in recent weeks narrowed the deficit to 12 per cent in the first week of July.
Notably, agriculture and allied activities contribute nearly one-fifth of India’s income and account for 46 per cent of the workforce.
Investors cautious due to slower Kharif sowing
As a result of the weak monsoon, analysts said that the near-term outlook for agri stocks has turned more selective, adding that below-normal monsoon progress and slower Kharif sowing have made investors cautious on the sector.
Companies may face earnings pressure
Companies, analysts said, with limited product diversification, weak backward integration, elevated input costs due to geopolitical tensions and high dependence on a single crop cycle are likely to face earnings pressure in Q1 FY27. However, Saurav Chaubey, equity research analyst, SAMCO Securities, said that the weakness appears cyclical rather than structural.
“If monsoon activity improves in the second half and sowing normalises, demand recovery across fertilisers, crop protection and irrigation could restore earnings momentum, making the sector attractive beyond the current quarter,” he said.
Historically, the April–September period marks the peak season for agri-input companies, and a healthy monsoon directly supports demand for crop protection products, fertilisers and other farm inputs.
Analysts remain selective
On whether investors should buy or avoid agri stocks, Avinash Gorakshakar, director and head of research at Profitmart Securities, said the concern is understandable because June is normally the key planting period for Kharif crops. He said investors should remain selective rather than avoid the sector altogether, as it continues to offer attractive medium to long-term opportunities.
UPL, PI, Coromandel, Shakti Pumps among top picks
He said that PI Industries remains his top pick owing to its specialty-led business model and resilient earnings visibility, while Coromandel International is well-placed through its integrated fertiliser and crop protection franchise. Shakti Pumps continues to benefit from structural demand for irrigation despite weather volatility.
Among fertiliser companies, he said that integrated phosphatic players like Coromandel International and Paradeep Phosphates are better positioned than commodity-focused peers.
Avinash Gorakhshar said that he prefers UPL, Sumitomo Chemical, and Sharda Cropchem.
UPL: Buy at around ₹595 | Target: ₹700 | Duration: 12–18 months
Sumitomo Chemical: Buy around ₹514 | Target: ₹625 | Duration: 12–18 months
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