GSFC, GNFC to FACT: How Israel-Hamas war is fueling fertilizer stocks in India — explained | Mint – Mint

Israel-Hamas war has entered 15th day tension in the Middle East is still at its highest levels, especially after the bombing of Gaza hospital. Even though global leaders are busy bringing truce between Israel and Hamas, smart stock market investor are buy making money out of this Israel war. After the spread of Israel-Palestine conflict, some fertilizer stocks have ascended to the tune of 40 per cent in last two weeks.
Shares of Gujarat State Fertilizers & Chemicls Ltd have risen from around 167.50 to 203 apiece levels after the spread of Israel war, delivering more than 20 per cent return to its shareholders. Fertilisers And Chemicals Travancore or FACT share price has ascended from near 510 to 710 apiece levels during Israle-Palestine conflict, delivering to the tune of 40 per cent return to its shareholders. Shares of Gujarat Narmada Valley Fertilizers and Chemicals or GNFC share price has shot up from around 610 to 655 apiece levels. Likewise, Madras Fertilizers share price has risen from 73.45 to 82.50 apiece levels in this time.
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According to stock market experts, outbreak of the Israel-Hamas war has raised concerns over global fertilizer supply. They believe that Israel’s Ashdod is a major hub for potash exports and shipping restrictions and war risk has jeopardized the smooth operations at this crucial port in Israel. Stock experts went on to add that investors are buying fertilizer stocks taking lessons from the Russia-Ukraine war as fertilizer stocks had ascended at that time as well.

Cue from Russia-Ukraine war

Reminding the fertilizer stock rise during Russia-Ukraine war, Sonam Srivastava, Founder and Fund Manager at Wright Research said, “The outbreak of the Israel-Hamas war has raised concerns over global fertilizer supply, particularly because of the potential disruption to potash exports from the region. Israel’s port of Ashdod, a major hub for potash exports, is operating in “emergency mode” due to the conflict. As a result, shipping restrictions and “war risk” surcharges have been imposed, potentially hindering the smooth flow of goods. ICL Group, one of the world’s largest fertilizer companies, which relies heavily on Ashdod, confirmed that their operations continue amid the emergency.”
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Taking cue for Russia-Ikraine war, Sreeram Ramdas, Vice President at Green Portfolio — PMS said, “When the Russia-Ukraine war broke out, we saw a similar spike in fertiliser stocks. This spike was due to supply-related worries. Similarly, Israel being an exporter of Potash, the supply-related worries are surfacing again. We believe this is a short-term overreaction and there won’t be any meaningful impact in the medium term. Looking at the absolute value, the value of Potash and Nitrogenous Fertilisers exported for fertiliser is only $330 million and $8 million from Israel.”
However, Sonam Srivastave maintained that a major price hike, like what was seen after the Russia-Ukraine war, is not expected.
Reminding the importance of Israel port in fertilizer supply chain, Omkar Kamtekar, Research Analyst at Bonanza Portfolio said, “The Port of Ashdod in Israel, located to the north of Gaza, is a critical hub for the country’s potash fertilizer exports. This port accounts for ~3% of the global potash supply, which is currently disrupted as Israel is grappling with a conflict with Hamas. A concerning ripple effect that would amplify this disruption is if Iran were to be drawn into the conflict. Iran is a major exporter of nitrogen and holder of significant natural gas reserves, both of which are key components in the production of nitrogen-based fertilizers.”
“During the closing stages of Q4FY23 and the entire Q1FY24, fertilizers companies faced stiff competition from a strong influx of inexpensive generic Chinese agrochemicals which made various management turn cautious. However, during Q2FY24 we observed the sign of this dumping recede lifted prices higher, allowing fertilizers companies to improve realizations. This progressed the near-term outlook which was seen in the share prices,” bonanza Portfolio expert said adding, “This rally is sustainable subject to any adverse geo-political event.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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