National Fertilizers near four-year low on BSE despite double-digit sales growth

The share price of National Fertilizers Ltd dropped for the third consecutive trading session on Monday. The stock is now trading at its four-year low on BSE.

Interestingly, the fall in price has come despite the fact that it has reported double-digit sales growth and production for Q1FY21. The company has nearly 77 per cent share Urea in its total revenue. The company recently reported that it has surpassed the production target and produced 16.11 lakh MT of Urea in the first five months of 2020-21, which is higher by 13 per cent in comparison to 14.26 lakh MT produced during the same period in 2019-20.

For the same period, NFL recorded the total fertiliser sale of 2,381 lakh MT, which is a growth of 16 per cent as compared to the previous record of 20.57 lakh MT recorded during the same period in the previous fiscal year.

Despite the sales & volume growth, the price realisations and delay in the payment of subsidy remain as the key challenges to the company. Further, the lack of availability of domestic gas to fertiliser sector and increasing trend in the price of spot RLNG, volatile prices of fertilisers in the international market add vows to the company.

The price trend and simple return over the same period (September 2016 to September 2020) for private players such as Coromandel International and Chambal Fertilisers show exactly inverse data. These two stocks made investors richer by 222.99 per cent and 161.77 per cent, respectively.