HSBC has updated its outlook on several companies in the agricultural inputs sector, reflecting a mix of optimism and caution. The brokerage has issued buy ratings for UPL, PI Industries, and Dhanuka Agritech, while adopting a more conservative stance on Bayer Corporation and Rallis India.
UPL
- Buy call
- Target price: ₹680 per share
HSBC has issued a buy call on UPL, raising its target price to ₹680 per share. The firm sees positive signs for UPL, particularly due to its limited exposure to the domestic market (13-18%) and indications of a recovery in global agriculture.
PI Industries
- Buy call
- Target price: ₹5,000 per share
Similarly, HSBC has a buy call on PI Industries, with the target price increased to ₹5,000 per share. The company is also benefiting from the global agricultural recovery, which is expected to enhance its performance.
Dhanuka Agritech
- Buy call
- Target price: ₹2,000 per share
HSBC has raised its target price for Dhanuka Agritech to ₹2,000 per share, maintaining a buy rating. The firm believes that the company’s prospects are bolstered by favorable agricultural conditions.
Bayer Corporation
- Hold call
- Target price: ₹6,300 per share
In contrast, HSBC has issued a hold call on Bayer Corporation, cutting its target price to ₹6,300 per share. This suggests the firm believes the stock is fairly valued at current levels and does not see significant upside potential.
Rallis India
- Reduce call
- Target price: ₹251 per share
HSBC has a reduce call on Rallis India, setting a target price of ₹251 per share. The firm is cautious about the company’s outlook in the current agricultural environment.
Market Insights
HSBC notes that both UPL and PI Industries have the least exposure to domestic business, which is a positive factor. The firm highlights that increased area under crop sowing and good rainfall are expected to support domestic sales growth in the second half of FY25. However, strong rains may moderate growth in Q2 for agricultural players. Overall, HSBC anticipates a healthy FY25 for the agricultural sector.
