Will investors flock to agri-stocks after the Budget?

Driving agricultural growth and productivity is a key focus for the government, finance minister Nirmala Sitharaman said in her Budget speech. According to her, the journey towards Viksit Bharat will be powered by four pillars: agriculture, MSMEs, investment, and exports.

The minister announced a National Mission on High Yielding Seeds to enhance research, develop high-yield, pest-resistant, and climate-resilient seeds, and commercialize over 100 seed varieties released since July 2024. Reacting to this, shares of Kaveri Seeds, Manglam Seeds and Nath Bio-Genes, rose 3-6%.

India is already the world’s second-largest in fish production and aquaculture, with seafood exports worth ₹60,000 crore. To tap the sector’s full potential, the government will introduce a framework for sustainable fisheries in its exclusive economic zone and high seas, focusing on the Andaman & Nicobar and Lakshadweep Islands. A customs duty exemption was granted for high-quality fertilizers and agricultural equipment to assist farmers. 

Stocks such as BKV, Zeal Aqua, Kinds Infra Ventures, Apex Frozen Foods and Waterbase saw gains of 1-6%. Similarly, fertilizer stocks, including Indra Industries, Paradeep Phosphates and Gujarat State Fertilizers & Chemicals also rose by 2-5%.

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“This budget, unlike previous ones, takes a more focused approach to the agrarian economy by targeting specific sub-segments,” said Nirav Karkera, head of research at Fisdom. He pointed to measures for fruits, vegetables, and makhana, along with a strong push for urea, advanced seeding facilities, and seed infrastructure development. Enhancements to kisan credit cards is a step in the same direction. With that in mind, Karkera believes “we might see more interest in agri-related companies going ahead”.

Sonam Srivastava, founder and fund manager at Wright Research PMS, said that she has taken quite a few bets in the agriculture space, though not all have seen an upward trend just yet. She believes agriculture is slated to be the next big investment theme over the next year or two, and “We might see more agri-focused funds being launched in response to the ongoing reforms”.

While the finer details are awaited, the government’s strong push for exports of agricultural products is clear. “This is likely to bring in demand and bolster topline of several companies,” she said, pointing out that margin growth will depend on multiple factors.

Also read | Agri-entrepreneurship scheme faces lukewarm response despite rural growth

In partnership with states, the Centre will launch the Prime Minister Dhan-Dhaanya Krishi Yojana to boost agriculture in 100 districts with low productivity, moderate crop intensity and below-average credit parameters. The initiative aims to enhance yields, promote crop diversification, improve irrigation, expand post-harvest storage, and ensure better credit access. Consequently, shares of irrigation companies like Kirloskar Brothers, KSB, and Rungta Irrigation rose by 3-5%.

Rural focus

Through the multi-sectoral ‘Rural Prosperity and Resilience’ programme, which will also be launched in partnership with states, the government aims to address underemployment in agriculture through skilling, investment and technology. “The goal is to generate ample opportunities in rural areas so that migration is an option, but not a necessity,” Sitharaman said.

She stated that the government is implementing the National Mission for Edible Oilseeds to achieve Aatmanir Bharta in edible oils. Building on this, a six-year ‘Mission for Aatmanir Bharta in Pulses’ will be launched, focusing on tur, urad, and masoor. To support farmers, central agencies like NAFED and NCCF will procure these pulses over the next four years from registered farmers who enter into agreements.

Also read | Rural consumption to outpace urban markets in FY25 on good monsoon, higher agri-produce prices: Kantar

Meanwhile, “The new five-year Cotton Technology Mission Scheme, focused on improving cotton farming and promoting extra-long staple varieties, is likely to aid an increase in cotton acreage and output,” said Srikumar Krishnamurthy, senior vice-president & co-group head, ICRA. He added that the sharp increase in budgetary allocation for the textiles ministry in 2025-26 is expected to support the industry across value chains, with an increase in allocations for the Amended Technology Upgradation Scheme and Production Linked Incentive schemes.

T. Manish, a research analyst at Samco  Securities said the cotton mission aims to enhance the quality of extra-long staple cotton varieties, fostering improved yields and sectoral growth. “Despite stagnant to declining cotton seed prices, this initiative has the potential to strengthen the industry’s outlook and benefit companies like Ambika Cotton,” he said. Shares of Ambika Cotton ended 3% lower.

Another measure was more Kisan Credit Cards to facilitate short term loans for 77 million farmers, fishermen, and dairy farmers. The KCC loan limit will be enhanced to ₹5 lakh from ₹3 lakh, for loans under the Modified Interest Subvention Scheme.