Shares of major basmati rice exporters, including KRBL Ltd, Kohinoor Foods Ltd, and LT Foods Ltd, surged by up to 19% in early Monday trading. This significant rise in share prices follows the government's recent decision to eliminate the minimum export price (MEP) on basmati rice, effective immediately.
The government's decision fuels market optimism
The unexpected policy change has generated considerable excitement in the market. Kohinoor Foods led the gains, with its share price climbing nearly 19% during intraday trading on the Bombay Stock Exchange (BSE). This sharp increase reflects the positive sentiment among investors in response to the removal of the MEP.
Other notable rice exporters also experienced boosts in their stock prices. Companies such as Chaman Lal Setia Exports Ltd, GRM Overseas Ltd, Mishtann Foods Ltd, Sarvesh Foods, and Lakshmi Energy and Foods Limited saw similar uplifts. Adani Wilmar Ltd, another key player in the industry, also benefited from the policy shift.
The Commerce Ministry's announcement on Friday removed the MEP not only for basmati rice but also for onions. This decision is expected to enhance export opportunities and boost the earnings of rice exporters.
Market expectations and future outlook
With the MEP removal, market participants anticipate a significant increase in basmati rice exports. This development is expected to benefit major exporters such as KRBL, LT Foods, Kohinoor Foods, and others. Analysts predict that the policy change will lead to a surge in exports, potentially driving up both revenue and share prices for these companies.
The favourable weather conditions this year, including substantial rainfall, are likely to support rice production. Increased crop acreage and higher yields can further enhance the export potential. States like Madhya Pradesh have already seen a 13% increase in rice cultivation over the past two decades, contributing to a more robust supply base.
Broader impact on related sectors
The positive impact of the MEP removal extends beyond just rice exporters. Companies like Kaveri Seed Company Ltd, which deals in rice and other seeds, are also expected to see a rise in share prices due to the anticipated increase in export activities.
The agricultural sector, in general, stands to benefit from the growing crop acreage and favourable weather conditions. Analysts note that the increased production of rice and wheat can drive economic growth in various states, further boosting the earnings of agricultural companies.
This could be an ideal opportunity for those looking to buy shares online and capitalise on positive market trends. Investing in stocks of companies poised for growth, like KRBL, Kohinoor Foods, and LT Foods, might offer attractive returns.
Analysts’ perspectives
Several analysts have highlighted KRBL as a top pick among other rice exporters. Prabhudas Lilladher, for instance, has identified KRBL as having significant upside potential. This endorsement is based on the company's strong market position and the positive impact of the MEP removal on its export prospects.
Key takeaways
For android only