Shares of Gujarat State Fertilizers & Chemicals (GSFC) soared 15% to Rs 163.80 on BSE in Friday’s intraday trading, helped by strong volumes after the company announced strong results for the quarter of June (Q1FY23), with consolidated net profit more than -doubled to Rs 345.81 crore, supported by healthy operating income.
The fertilizer company had reported a net profit of Rs 136.11 crore in the quarter a year ago (Q1FY22). On a quarterly (QoQ) basis, net profit increased by 21% from Rs 286 crore in Q4FY22. The company’s operating revenue jumped 63% year-on-year and 48% quarter-on-quarter to Rs 3,018 crore.
As of 10:54 am, GSFC was trading up 14% at Rs 162.10, against 0.09% gain in the S&P BSE Sensex. Over-the-counter trading volumes have increased eightfold today. A total of 16.7 million shares representing 4.2% of GSFC’s total capital changed hands on the NSE and BSE.
The stock has recovered 39% from its recent low of 117.75 rupees reached on June 20, 2022. The stock had hit a 52-week high of 198.70 rupees on April 5, 2022.
At the same time, the agricultural sector has experienced stable growth over the past two years compared to other sectors of the economy. Normal monsoons and improved reservoir levels, higher coverage under assured irrigation, remunerative crop prices, emphasis on exports, supportive government policies including fertilizer subsidies, Record purchases under the MSP and the push for new products and technologies have been the main drivers of growth in the agricultural sector.
However, fertilizer industry consumption fell 5% to 63 million tonnes on a higher basis in 2021-22. Overall, consumption growth was in line with previous years, with 2020-21 being an exception due to the regularization of DBT-related sales.
Fertilizer availability during the year was affected by high costs of manufactured and imported products, conflicting demand from major fertilizer consuming markets, and supply issues from major sources. In addition, the three consecutive years of normal monsoons led to lower opening stocks. The government’s proactive approach and close coordination with industry has ensured rapid access to farmers.
Going forward, rising agricultural commodity prices, government focus on agriculture, expectation of normal monsoon and higher reservoir levels bode well for agriculture.
Support: Rs 153.50
Resistance: Rs 188
Despite the steep fall of almost 35% in June 2022, the stock managed to firmly maintain its positive bias on the weekly chart. During the sharp correction, the stock touched the lower end of the Bollinger Band on the weekly chart at an odd level of Rs 115 and then pulled back.
In fact, with today’s strong rally, the stock is trading firmly above its 20-WMA placed at Rs 153.50, after a five-week gap. The short-term bias for the stock should remain bullish as long as the stock is trading above the 20-WMA.
(Inputs by Rex Cano)