Agro-based industries are expected to see 15-45 per cent improvement in sales and profits in the coming quarters on rise in rural demand in view of good rains, a latest Assocham report said.
The performance of both mid and large cap agri-based firms such as Mahindra and Mahindra, Rallis India and Jain Irrigation is expected to improve, it added.
“With Monsoon being the lifeline of the Indian economy, it is no surprise that good rains would bring good fortune not only to the companies engaged in the farm-related sectors but also the entire macro picture,” Assocham President Sunil Kanoria said in a statement.
The firms benefitting directly from abundant rainfall relate to those engaged in irrigation infrastructure, farm equipment manufacturers, seed development and food processing firms, the industry body said in its report “Monsoon Showers Fortune on Farm Related Firms”.
Host of other firms engaged in fertilisers, seeds, farm equipment, food processing and consumer consumption would immensely benefit from a sizeable improvement in the rural demand for farm inputs, it said.
With good monsoon, the report said sale of tractors for Mahindra and Mahindra is expected to rise by 15 per cent in the next seven months this fiscal.
Other leading tractor and farm equipment firms including Escorts and VST Tillers Tractors are also expected to do well both in income and net earnings, it said.
Similarly, Rallis India — a subsidiary of the Tata Group — is expected to see 33.58 per cent higher sales during the monsoon months, while Coromandel International is likely to see sale improve by 19.82 per cent in the next seven months of this financial year.
“A positive monsoon for the year 2016 is projected to put the irrigation business in good shape. A growth of 17-18 per cent is expected in the sales during the monsoon season as well as the lean season,” the report added.