UPL, Dhanuka Agritech, Bayer Crop Science gain up to 2%: What’s driving gains?

The brokerage prefers backward-integrated players as they make a case for a wider delta in earnings led by growth and margin recovery.

While UPL has been the laggard with a negative return of 24 per cent during the period.

Shares of agrochemical stocks such as UPL, PI Industries, Dhanuka Agritech, Bayer Crop Science, and Rallis India were trading in the green with gains of up 2 per cent in Thursday’s session (December 21) as global brokerage HSBC expected a turnaround in the space.

Global brokerage HSBC sees the agri inputs space to revive in 2H2024, led by normalising inventories, pesticide price stability, and higher crop prices compared to historical rates. The brokerage prefers backward-integrated players as they make a case for a wider delta in earnings led by growth and margin recovery.

Furthermore, the brokerage maintains a bullish outlook on 3 of the stocks from the space with a ‘buy’ rating. The stocks are UPL, PI Industries, and Dhanuka Agritech with a target price of Rs 750, Rs 4100, and Rs 1200 per share, respectively. For Dhanuka, the brokerage has raised the target from the earlier Rs 925.

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For Bayer Crop Science, HSBC has maintained a ‘hold’ call and raised the target from Rs 5000 to Rs 5600. Nevertheless, it has downgraded the Tata Group counter, Rallis India, from the earlier ‘hold’ call to the 'reduce' rating with a target of Rs 195.

Over the last 1-year period, these stocks have been largely trading mixed, with Dhanuka Agritech logging the most gains at 46 per cent, while UPL has been the laggard with a negative return of 24 per cent during the period.

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