The Best Agriculture Stocks for Long-Term Investors

Agriculture forms the backbone of India’s economy. Nearly 60% of the Indian population practice farming. It forms 20% of the nation’s GDP. Globally, India ranks second in agriculture outputs. So, Investing in agriculture stocks can be beneficial when the GDP of any company is highly dependent on a particular sector. In this blog, we will cover the best agriculture stocks for long-term investors.

With a growing population, the demand for farm produce is also increasing. This increasing demand presents a wide range of investors in the agriculture sector. Agricultural companies cover various segments like seed production, crop cultivation, fertilizers, agrochemicals, food processing, and farm machinery.

Are you planning to invest in agricultural stocks? Here are the details of agriculture stocks and everything you need to know.

What are Agriculture Stocks?

Agriculture stocks represent the shares of companies involved in various segments of the agriculture industry. By investing in this sector, investors gain exposure to the profits and growth of these companies. These stocks offer a great way to diversify your portfolio. Factors like population growth, substantial food production practices, and changing dietary needs drive this ever-growing sector.

Why you should invest in Agriculture Stocks?

Agriculture stocks let you participate in the ownership of the company. By investing in these shares, you involve yourself in the financial performance of companies. Let’s explore some of the key reasons to invest in the farming sector:

• Resilience and Stability: India has a strong agriculture history. This industry has demonstrated good stability. Agriculture stocks can be considered a reliable investment choice.
• Opportunities: The farming sector offers a wide range of opportunities to investors. This sector benefits from cyclical trends and allows investors to capitalize on suitable market situations.
• Long-term potential: Agriculture stocks provide long-term benefits. This further compliments fast growth and good profits.
• Global significance: Agriculture fulfills the basic needs of a nation. Hence, this sector is deeply connected to economies worldwide. Being the fundamental sector of a country, it ensures enduring relevance to its investors.
• Diverse Growth: Agriculture stocks not only include crops and farming. These stocks also extend to other segments like biofuels, pharmaceuticals, and textiles.

Top Agriculture Stocks in India

1) Coromandel International Limited

The company was founded in the early 1960s. It has its headquarters in Hyderabad, Telangana (India). It is a part of the Murugappa group. The company has sixteen manufacturing units spread across India. These states include Andhra Pradesh, Tamil Nadu, Maharashtra, Gujarat, Rajasthan, Madhya Pradesh, Uttar Pradesh, and Jammu & Kashmir.

The company specializes in agrochemicals and crop protection products. It produces fertilizers, pesticides, and specialty nutrients. Gromor, Godaveri, Paramfos, Parry Gold, and Parry Super are some of the products of Coromandel International. Coromandel International is India’s second-largest Phosphatic fertilizer player.

Coromandel International has given more than 286% returns in the last five years. The company’s profit has increased from 1065 crore in 2020 to 2063 crore in 2023. FII and domestic institutions have high holdings in the company. It has an ROE of around 17% and the debt-to-equity ratio is 0.05 which demonstrates the stability and strength of stock.

2) UPL Limited

UPL established its foundation in 1969 and currently operates its headquarters in Mumbai, Maharashtra, India. It offers both agro and non-agro services. Its products are sold in more than 150 countries worldwide.

UPL Ltd produces and sells agrochemicals, industrial chemicals, specialty chemicals, and chemical intermediates. Its agro products are seeds, conventional products, and other agriculture-related products. Non-agro segments include industrial chemicals, herbicides, fungicides, insecticides, PGRs, nutrifeeds, and specialty chemicals.

UPL Limited has not given good returns in the last five years but the company’s revenue and profit are increasing rapidly. For the first time, the revenue of UPL has crossed 50,000 crores.

3) PI Industries

PI Industries was founded in 1946. It is based in Udaipur, Rajasthan (India). It is a multinational agro company spread across six continents. The industry has four global offices and operates in 30+ countries.

PI industries manufacture and market granular formulations and generic molecules. Its key services are R&D services, CSM services, and distribution services. The company mainly focuses on quality, research, and innovation, enabling it to expand its presence in domestic and international markets.

PI Industries has given around 220% returns in the last five years. The company’s profit has increased from 457 crores in 2020 to 1230 crore in 2023. It’s ROE is around 19.23%. Stock is almost debt-free having debt to equity ratio of around 0.02. Foreign Institutions and mutual funds have increased their holdings in the last year, making it one of India’s best Agriculture stocks.

4) Chambal Fertilizers Limited

In 1985, Chambal Fertilizer established its headquarters in Kota, Rajasthan (India). It is the largest manufacturer of Urea in the private sector. Chambal Fertilizers is a part of Aditya Birla group.

This company is a leading agrochemical manufacturing firm. It produces fertilizers and pesticides. It is also engaged in the trading of several agricultural inputs. The company has also started a miniature potato seeds business, software, and spinning. It has expanded its business across many countries.

The stock has given more than 200% returns in the last five years. It has improved its debt-to-equity ratio from 2.27 in March 2020 to 0.25 in April 2024. FIIs have increased their holding from 9% to 15% in the last year. As per recent news, the government is trying to remove GST from seeds and fertilizers which can be beneficial for chambal fertilizers. The company’s revenue doubled in just two years i.e., 12766 crores in 2001 to 27941 crores in 2003 which made it one of the best agriculture stocks in India.

5) Fertilizers and Chemicals Travancore Limited

Do you know if you had invested Rs. 1 lakh in this stock, it can be more than Rs. 27 lakh today? I am talking about multi-bagger stock Fertilizers and chemicals Travancore Limited. FCT was incorporated in 1943. The company is headquartered in Kochi, Kerala (India). It was the first fertilizer manufacturing industry in India after Independence. It is engaged in the manufacturing of fertilizer and chemicals. The Government of India holds the 90% ownership of the company.

Its products include ammonia, sulphuric acid, ammonium sulfate, ammonium-phosphate sulfate, caprolactum, and Zincated ammonium phosphate. FCT operates in two segments: Fertilizer and petrochemical. The fertilizer segment deals with ammonium phosphate, ammonium sulfate, mixtures, and muriate of potash(MOP). The petrochemical segment deals with caprolactam.

The debt to equity ratio of the company has fallen up to 9% in recent financial year. It has an ROE of around 28.8%. The profit and revenue of the company have increased up to 70% compared to the previous year which represents a decent growth. FIIs have been buying in Fert & chem Travan for the last three months. The company has given huge more than 2700% returns in the last five years.

6) Bayer CropScience limited

Bayer CropScience Limited is an Indian subsidiary of Bayer AG. The headquarters of the company is located in Hyderabad. The company mainly manufactures and distributes herbicides, insecticides, and various other agrochemical products.

The company offers a wide range of seeds like soybean seeds, corn seeds, silage seeds, cotton seeds, etc. Its services include genetics, innovative breeding, animal medications, diagnostics, and medical testing equipment. The company operates in three business areas: crop protection, seeds, and traits, and digital farming.

Bayer CropScience can be considered an underrated agriculture stock in India. It has given nearly 96% returns in the last five years. The stock has recently given a breakout after four years. The company has given an ROE of around 26%. It is a nearly debt-free company. The profit and Revenue of Bayer CropScience is increasing continuously with a rate of 25-30%. You can add it as one of the best agriculture stocks in India.

7) Sumitomo Chemicals India Limited

Sumitomo Chemicals is a Japanese chemical company. It acquired an Indian agrochemical manufacturing unit in 2010. The Indian subsidiary is named New Chemi Industries. Its motive was to expand crop protection products in the Indian market.

The company deals in a wide range of products. It manufactures and sells crop protection products, animal nutrition, household products, public health, and pest control products.

FIIs and DIIs have increased their holding in this stock in the last year. The company is doing well in terms of revenue and profit growth with a rate of 25%. It has an ROE of around 16%. It has given around 161% returns in the last five years.

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8) Madras Fertilizers Limited

Madras Fertilizers was established in 1966. The company is headquartered in Chennai, Tamil Nadu (India). It was incorporated as a joint venture between Amoco and the Government of India.

This company manufactures ammonia, urea, and complex fertilizers. Its products are agrochemicals, crop improvement products, and pesticides.

The company has given more than 400% returns in the last five years. Its profit was in negative since 2022 but delivered Rs. 2 crore profit in 2023 which jumped to Rs. 162 crore in 2023. You can add it to your watchlist. Buy it only if it delivers good quarter results in 2024.

Future trends and opportunities for Investing in Agriculture Stocks

There are numerous benefits of investing in the agriculture sector. This sector also provides a minor shield from the varying risks and downfalls. Here we will discuss the future goals and opportunities of agriculture stocks:

• Increasing Demand

Major changes can be seen in food preferences and diet patterns in India. Shift to nutri-cereals, low-sugar food, and edible oils have created a surge in the demand. This has increased the growth of agro-industries to a good extent.

• Export potential

India’s agriculture system holds a prominent space in the global market. India is also a leading exporter of rice and sugar. The evolving export potential of the country promises a good future for investors.

• Increasing agriculture input demand

To fulfill the demand, higher food production is necessary. This highlights the importance of fertilizers, pesticides, seeds, and suitable irrigation techniques.

• Technological advancements

Today’s farming practices involve the use of modern technology. From sowing to harvesting, technology has taken over manual labor. This creates a good opportunity for agricultural stocks to benefit and generate good revenue.

Conclusion

In this article, we have studied the agriculture stocks, top-performing agriculture companies, their future trends, and opportunities. Agriculture stock can be a significant decision for investors looking for long-term profit. This sector offers diverse exposure to people from seeds, fertilizers, and food processing to equipment manufacturing.

With proper knowledge about the stock you choose, you can enhance your investments. Understanding the risks, and performance of various shares, and good research can help make a good investment decision.