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2HFY21 looks promising owing to better rabi season

Long-term story intact

In this report, we have analyzed the sowing movement in CRIN’s key states and corresponding fertilizer volume data. Here are the key highlights:

* NPK fertilizer is driving overall manufacturing volumes, with double-digit growth in key states in 3QFY21 (as per the Ministry of Fertilizers).

* AP, Telangana, and Maharashtra would lead NPK fertilizer’s growth.

* An increase in rabi paddy and chilly sowing acreage in CRIN’s key markets would prove beneficial.

Strong volume growth continues

* As per data from the Ministry of Fertilizers, CRIN’s overall volumes in 3QFY21 grew 21% YoY, driven by 128% YoY growth in trading volumes, whereas manufacturing volumes de-grew 3% YoY.

* Total phosphatic fertilizer volumes grew 8% YoY; growth was seen despite strong growth of 27% in the base quarter. Growth in the current quarter is driven by 13% YoY growth in NPK fertilizer, whereas DAP has de-grown 14% YoY. Manufacturing DAP volumes declined 62% YoY, whereas trading volumes increased 508% YoY in 3QFY21. NPK volumes grew 13% YoY on account of 6% YoY growth in manufacturing volumes and trading volumes of 43,423mt – which were absent in the base quarter. Traded volumes of urea and MOP grew 17% and 104% YoY, respectively.

NPK fertilizer sees double-digit growth across key states, ex-Karnataka

* CRIN’s key markets are Andhra Pradesh (AP), Telangana, Maharashtra, Karnataka, West Bengal, and Odisha. These six states account for 94% of CRIN’s NPK/DAP volumes and 84% of its overall volumes (as of FY20).

* CRIN’s overall fertilizer volumes in AP (which formed 31% of DAP + NPK volumes as of FY20) grew 18% YoY in 3QFY21, driven by 9% growth in phosphatic fertilizer and 126% YoY growth in urea. Within phosphatic fertilizer, NPK volumes grew 11% YoY, whereas DAP declined 4% YoY.

* In Telangana as well (which forms 28% of CRIN’s NPK/DAP volumes), overall volume growth of 26% YoY was driven by phosphatic fertilizer (+12% YoY) and urea (+140% YoY). Within phosphatic fertilizer, NPK volumes grew 20% YoY, whereas DAP declined 23% YoY.

* Volume growth in Maharashtra (which forms 13% of CRIN’s NPK/DAP volumes) was the highest v/s other key markets at 54% YoY. Overall volume growth was driven by phosphatic (+13% YoY), urea (+108% YoY), SSP (+226% YoY), and MOP (+512% YoY). Within phosphatic fertilizer, NPK volumes grew 23% YoY, whereas DAP declined 23% YoY.

* In Karnataka (which forms 11% of CRIN’s NPK/DAP volumes), overall volumes grew 18%, driven by 117% YoY growth in urea, whereas phosphatic fertilizer volumes declined 10% YoY.

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