ICRA’s outlook on the sector is Negative as the West Asia conflict has resulted in sharp depreciation of the Indian rupee against the dollar, compounding the pricing pressure amid elevated raw material prices and constrained raw material availability, particularly sulphur and ammonia. The trajectory of input prices and availability, as the conflict in West Asia moves towards a resolution, will remain a monitorable.

Fertiliser sales volumes grew largely in line with long-term trends of about 2.6% in FY2026 amid healthy monsoons. Urea sales also grew by a steady 2.9% YoY with YoY growth of the rabi sowing area. This demand was partly met by imports as some domestic urea plants were shut due to maintenance. DAP1 also witnessed healthy sales amid improved availability.

The overall domestic fertiliser requirement is pegged at 38.39 MMT for the kharif season, against which current stocks stand at 19.7 MMT. The systemic inventory for DAP has improved in recent months supported by imports under the advantage/disadvantage scheme. Urea availability is expected to remain adequate amid full gas availability for domestic urea manufacturing with nearly 3-4 MMT of imports contracted recently to cover the kharif season.