The stock price of Kakinada-based Nagarjuna Fertilisers & Chemicals Ltd (NFCL), a diversified company with interest in agrochemicals, irrigation system and energy, has risen 73.38% or Rs 16.95 in the last one month on Bombay Stock Exchange (BSE) following strong rumours that Mukesh Ambani-led Reliance Industries Ltd (RIL) is eyeing a majority stake in the company.
The stock after touching its life-time high of Rs 41.55 closed at Rs 40.05 in BSE on Monday. The rise of 73.38% in its share price was at a time when the domestic equity bourses witnessed a major turmoil sparked by the US subprime mortgage crisis that resulted in share prices of majority of stocks coming down sharply.
The NFCL counter witnessed around 1.57 crore shares changing hands in BSE on Monday. As per the latest share holding pattern available with the stock exchange, NFCL promoters hold 35.25% of the total paid up equity capital of the company. Though NFCL officials has denied these rumours, the speculation of RIL planning to take a stake in NFCL became strong as RIL already has a proposal to set up two fertilizer plants, each of two million tonne capacity in Anandra Pradesh.
RIL has reportedly argued that Rs 40 billion can bring down the fertilizer subsidy if producers switch from naphtha to natural gas. NFCL has a leadership position in Andhra Pradesh in terms of market share for urea, besides having a substantial presence in West Bengal and Orissa. The company’s annual installed capacity stands at 20.51 million tonne of urea in India.
Now the company is exploring plans to revamp its plants and increase its production capacity or diversify its product mix in future while continuing to focus on businesses like speciality fertilizers and micro-irrigation.
