On October 10, 2024, shares of Rashtriya Chemicals and Fertilizers (RCF) soared by over 8 percent during intra-day trading, following the announcement of a significant purchase order placed with Larsen & Toubro Ltd (L&T). This development is a part of RCF’s ongoing commitment to expand its production capacity, a crucial step in addressing the agricultural needs of India.
RCF’s Board of Directors approved the purchase order during a meeting held on October 9, 2024. This order pertains to the establishment of a new 1200 MTPD (DAP basis) Complex Fertilizer plant at RCF’s Thal facility, which will be executed on a Lump Sum Turn-Key (LSTK) basis.
The contract, valued at ₹1,000.27 crore (excluding GST), entails that L&T will oversee the entire project from its design phase to procurement and construction. Set to take 27 months for completion, this plant will play a pivotal role in enhancing RCF’s fertilizer production capabilities.
Once operational, the new plant will significantly boost RCF’s fertilizer output, enabling the company to better serve the growing demands of Indian farmers. This strategic investment aligns with RCF’s mission to strengthen its position within India’s agricultural sector by ensuring a consistent supply of vital fertilizers.
Fertilizer plays a fundamental role in India’s agrarian economy, making this project essential for satisfying the increasing needs of the nation’s agriculture. As food security continues to be a pressing concern, projects like these are critical for sustainable agricultural growth.
Previous Investments in Capacity Expansion
The recent order follows RCF’s prior initiatives aimed at expanding its production capabilities. Earlier, the company entered into a contract with international firm Topsoe for a revamp of its ammonia plant at RCF Thal. This contract, worth ₹514.6 crore and announced in July 2024, focuses on upgrading the ammonia facility to lower its specific energy consumption. The revamp includes the procurement of a Basic Engineering Design Package (BEDP) and the provision of specialized equipment and catalysts over a period of 36 months.
Expanding Presence Across Maharashtra
RCF operates two prominent production sites in Maharashtra, located in Trombay and Thal. These facilities not only produce nitrogenous, phosphatic, and potassic fertilizers but also manufacture a diverse array of industrial chemicals. RCF’s strategic initiatives underline its commitment to maintaining leadership in the Indian fertilizer industry while striving for sustainable growth through technological advancements and capacity enhancements.
The recent partnership with L&T highlights RCF’s focus on modernizing its infrastructure and optimizing production efficiencies. This strategic move underscores RCF’s long-term growth objectives, aimed at both domestic and international markets, ensuring a robust supply chain in the agricultural sector.
Stock Price Trend
The stock price of RCF surged to a high of ₹185.25, marking an increase of 8.3 percent. Despite this surge, the stock remains over 24 percent below its record high of ₹245, reached in July this year. Notably, the stock has appreciated over 57 percent when compared to its 52-week low of ₹117.65, recorded in October 2023.
In the past year, RCF’s shares have climbed more than 40 percent, and year-to-date (YTD) the stock has advanced over 16 percent. October has seen a slight increase of 1 percent after two months of decline, during which it fell by 10 percent in September and 8 percent in August. Prior to this period, the stock enjoyed four consecutive months of positive performance, exhibiting impressive gains of 13 percent in July, 25 percent in June, 2 percent in May, and 17.5 percent in April.
