The Indian economy is growing by leaps and bounds and is making many advancements in different sectors like technology, manufacturing, the auto industry and more. However, even today, it is majorly known as an agricultural country. The agriculture sector, however, is not limited to only farming. It is a very diverse sector that includes agriculture and allied sector, agrochemical segment, etc. So which are the top stocks from this sector? Read on to know about them and a few key details of the sector as a whole.
Read More: Sectors that are expected to perform well in 2023
Top stocks in agriculture and allied sectors
Some of the top stocks in agriculture and allied sector in terms of market capitalisation and their key details are mentioned below.
Top stock in agriculture #1 – PI Industries
PI Industries Ltd stands as a prominent contender within the agrochemicals sector, boasting a formidable foothold in both the domestic and international markets. The company’s reach encompasses cutting-edge facilities situated in Gujarat, hosting all-integrated process development groups along with internal engineering expertise. The company offers various segments of insecticides, fungicides and herbicides as well as research and development services including manufacturing of products from this sector.
The key details of the company are tabled below. Figures as of August 11th, 2023
| Category | Details |
| Market Capitalization | Rs. 58,715 crores |
| PE Ratio | 43.57 |
| Return on Equity | 19.43% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 46.08% |
| Share price | Rs. 3,854.40 |
| Dividend yield | 0.26% |
The trailing returns of PI Industries Limited are tabled below
| Period | Trailing Returns |
| 1 year | 17.64% |
| 3 years | 25.99% |
| 5 years | 37.93% |
| 10 years | 39.82% |
Top stock in agriculture #2 -UPL
UPL’s primary focus revolves around the agrochemicals sector, where it plays a pivotal role. This role is further complemented by its involvement in the industrial chemicals domain, as well as the manufacturing of chemical intermediates and speciality chemicals. Notably, UPL also undertakes the significant tasks of producing and marketing field crops and vegetable seeds, showcasing its commitment to a diverse range of agricultural endeavours.
The key details of the company are tabled below. Figures as of August 11th, 2023
| Category | Details |
| Market Capitalization | Rs. 45,018 crores |
| PE Ratio | 15.75 |
| Return on Equity | 12.56% |
| Debt Equity Ratio | 0.67% |
| Promotor’s Holdings | 32.35% |
| Share price | Rs. 599.70 |
| Dividend yield | 1.67% |
The trailing returns of UPL are tabled below
| Period | Trailing Returns |
| 1 year | -21.64% |
| 3 years | 6.65% |
| 5 years | 7.16% |
| 10 years | 20.71% |
Top stock in agriculture #3 -Godrej Agrovet
Godrej Agrovet Limited stands as a versatile agri-business enterprise with a strong emphasis on Research & Development. Its core mission revolves around enhancing the agricultural output of Indian farmers through the creation of innovative products and services. These innovations are designed to yield sustainable advancements in both crop and livestock productivity. The company has achieved prominent leadership positions within various sectors it operates in, including Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry, and Processed Foods.
The key details of the company are tabled below. Figures as of August 11th, 2023
| Category | Details |
| Market capitalization | Rs. 9,126 crores |
| PE Ratio | 28.12 |
| Return on Equity | 12.16% |
| Debt Equity Ratio | 0.02% |
| Promotor’s Holdings | 74.05% |
| Share price | Rs. 473.80 |
| Dividend yield | 2.00% |
The trailing returns of Godrej Agrovet are tabled below
| Period | Trailing Returns |
| 1 year | -4.28% |
| 3 years | 0.68% |
| 5 years | -5.39% |
| 10 years |
Top stock in agriculture #4 -Bombay Bumrah Trading
Established in the year 1863, the Bombay Burmah Trading Corporation Limited (BBTCL) holds a significant position as the flagship company within the esteemed Wadia Group. Originally established as a public entity, BBTCL’s initial purpose centered around conducting the Teak business initiated by William Wallace, chiefly to address domestic requirements. However, a pivotal transition took place in 1913 when BBTCL redirected its focus towards tea plantations, making strategic investments in tea estates located across South India.
At present, BBTCL has successfully expanded its presence across a diverse spectrum of industries. These encompasses Tea and Coffee cultivation, alongside the cultivation of various other plantation products. Additionally, the company has ventured into the production of Biscuits, Dairy products, Auto electric and White goods, as well as weighing products. BBTCL’s versatile scope extends further into horticulture, where it has made a notable imprint, and also into the realm of healthcare products. Within the healthcare sector, the company is actively involved in the manufacturing and distribution of Dental, Orthopedic, and Ophthalmic products, thus highlighting its multifaceted contributions across various domains.
The key details of the company are tabled below. Figures as of August 11th, 2023
| Category | Details |
| Market Capitalization | Rs. 6,892 crores |
| PE Ratio | |
| Return on Equity | 5.83% |
| Debt Equity Ratio | 1.06% |
| Promotor’s Holdings | 65.93% |
| Share price | Rs. 988.60 |
| Dividend yield | 0.12% |
The trailing returns of Bombay Bumrah Trading Corporation Limited are tabled below
| Period | Trailing Returns |
| 1 year | 8.38% |
| 3 years | -13.54% |
| 5 years | -8.73% |
| 10 years | 27.35% |
Top stock in agriculture #5 -Advanced Enzyme Technologies Limited
This company was founded in 1957 and is based in Thane, India. Advanced Enzyme Technologies Limited is engaged in the business of R&D, manufacturing and marketing of enzymes in the country as well as abroad in the US, Asia, Europe and more. These enzymes cater to various business segments like human healthcare, animal nutrition, baking, fruit and vegetable processing, yeast processing, specialty applications, etc. The non-food processing enzymes are used for textile processing, detergent and cleaning aids, bio-fuels, etc.
The key details of the company are tabled below. Figures as of August 11th, 2023
| Category | Details |
| Market Capitalization | Rs. 3,686 crores |
| PE Ratio | 24.52 |
| Return on Equity | 8.94% |
| Debt Equity Ratio | 0.01% |
| Promotor’s Holdings | 46.52% |
| Share price | Rs. 329.00 |
| Dividend yield | 2.16% |
The trailing returns of Advanced Enzyme Technologies Limited are tabled below
| Period | Trailing Returns |
| 1 year | 21.90% |
| 3 years | 15.89% |
| 5 years | 8.38% |
| 10 years |
Top stock in agriculture #6 – Kaveri Seed
Kaveri Seed Company Limited is in the business of researching, producing, processing and marketing hybrid seeds of field and vegetable crops in India. These seeds are meticulously developed to embody superior genetic traits, which contribute to enhanced agricultural yields and improved crop quality. The company’s involvement spans every stage of the seed’s journey, from the initial research and development phase to the intricate processes of production and refining, culminating in the targeted marketing of these superior hybrid seeds. The company sells its products within the country and abroad through its network of distributors and retailers.
The key details of the company are as below. Figures as of August 11th, 2023
| Category | Details |
| Market Capitalization | Rs. 3,212 crores |
| PE Ratio | 11.8 |
| Return on Equity | 20.5% |
| Debt Equity Ratio | 0.00% |
| Promotor’s Holdings | 59.90% |
| Share price | Rs. 573.90 |
| Dividend yield | 0.70% |
The trailing returns of Kaveri Seed Company Limited are tabled below
| Period | Trailing Returns |
| 1 year | 19.38% |
| 3 years | -4.17% |
| 5 years | -1.67% |
| 10 years | 6.01% |
Agriculture sector – Sector Overview, Government initiatives, Investments and Future Prospects
Sector overview
India holds a prominent position as a key participant in the global agriculture sector as it possesses the second-largest expanse of agricultural land worldwide, playing a pivotal role in the livelihoods of approximately 55% of its population. In the year 2022, the Indian agriculture industry achieved a substantial size of Rs. 80,550 Billion. Forecasts from the IMARC Group project this market to escalate to Rs. 158,991 Billion by 2028, exhibiting a noteworthy growth rate (CAGR) of 12.2% during the period spanning 2023 to 2028. The landscape of the agriculture industry is diverse, characterized by multiple sectors and sub-sectors such as crop production, livestock rearing, agricultural technology, food processing, the supply of agricultural inputs like seeds, fertilizers, and pesticides, provision of agricultural services, equipment manufacturing, trade and distribution, and retail operations.
Government Initiatives and Investments
To bolster this vital sector, the Indian government has established the Food Processing Fund (FPF), a dedicated fund of approximately US$ 265 million within the National Bank for Agriculture and Rural Development (NABARD). This fund seeks to extend accessible credit to designated food parks and related processing enterprises. The sector has further witnessed a notable surge in investments, with a cumulative foreign direct investment (FDI) inflow of US$ 2,708.72 million recorded between April 2000 and December 2022.
Looking forward, the Indian Government is set to launch Kisan Drones in 2022, focusing on crop assessment, digitizing land records, and applying insecticides and nutrients. In the fiscal year 2021-22, the agriculture and allied sector contributed 18.8% to Gross Value Added until January 31, 2022. The Agricultural Technology Management Agency (ATMA) Scheme is active in 704 districts across 28 states and 5 Union Territories, supporting agricultural education. This scheme provides grants to state governments for integrating modern agricultural technologies and best practices across various domains.
From April 1, 2001, to December 31, 2022, a substantial 42,164 storage infrastructure projects (Godowns) with a cumulative capacity of 740.43 Lakh MT received assistance nationwide under the Agricultural Marketing Infrastructure (AMI) sub-scheme of the Integrated Scheme for Agricultural Marketing (ISAM). Furthermore, the central government authorised five private companies to pilot cluster farming for specific horticultural crops, covering around 50,000 hectares. This initiative involves a significant investment of US$ 91.75 million (Rs. 750 crore). The chosen companies including Prasad Seeds, FIL Industries, Sahyadri Farms, and the Meghalaya Basin Management Agency, were selected through a competitive bidding process.
Future Prospects
India’s agriculture sector is anticipated to gain momentum in the upcoming years, propelled by heightened investments in vital infrastructure like irrigation, warehousing, and cold storage. The adoption of genetically modified crops is also set to bolster farmers’ yields. India’s progress towards self-sufficiency in pulses is attributed to early maturing pulse varieties and increased minimum support prices.
Over the next five years, the central government is directing a substantial US$ 9 billion towards fisheries under the PM Matsya Sampada Yojana, with the goal of achieving 220 lakh tonnes of fish production by 2024-25. The food processing industry’s embrace of quality assurance methods like TQM, ISO certifications, HACCP, GMP, and GHP promises significant advantages. The Ministry of Food Processing Industries (MoFPI) is actively advancing investments in India’s food processing industry, supported by the umbrella PMKSY scheme, allocated Rs. 4,600 crore (US$ 559.4 million) until March 2026.
Conclusion
The agricultural sector in India holds the top position in various segments like milk production in the world contributing 24% of global milk production, millet production, sugar production, and the number of organic farms. The FDI flows in the sector are permitted up to 100% through the automatic route in agriculture and animal husbandry. This sector is changing at a rapid pace with the advancements in technology along with various government initiatives as well as domestic and foreign investments in this sector. While stocks from this sector can be a good investment option for investors with a long-term perspective it is important to invest in companies that align with their risk-return perceptions, and investment horizons.
