RCF, NFL, other fertiliser stocks plunge 5-10% on no immediate tax relief from GST Council

Stocks of fertiliser companies like National Fertilisers Ltd (NFL), Gujarat Narmada Valley Fertilizers & Chemicals (GNFC) and Rashtriya Chemicals and Fertilizers (RCF) plunged by 5-10% on Monday, June 24.

The shares dropped in the first hour of trade, and continued to remain in the red as session progressed. At 12:57 pm, NFL was trading 7.32% lower at ₹130.68 apiece on the NSE, whereas RCF was down 6.83% at ₹193.59.

The sharpest declined was logged by Fertilisers and Chemicals Travancore (FACT), which hit an intraday low of ₹1,021 on the NSE, down 10.1% as against the last closing price.

GNFC registered an intraday low of ₹677.9, down 5.6%, but pared most of the losses as the trading progressed. At 1:00 pm, it was trading 1.06% lower at ₹708.25.

5% GST on fertilisers to continue for now

The decline in fertiliser stocks came after the GST Council, which met on Saturday, refrained from granting its nod on the recommendation to exempt fertilisers from taxation.

The Parliamentary Standing Committee on Chemicals and Fertilisers had, in February, recommended the GST Council to exempt fertiliser nutrients and raw materials, which are currently taxed at the rate of 5%.

At the council meeting chaired by Finance Minister Nirmala Sitharaman, it was decided to refer the recommendation to the Group of Ministers (GoM) on rate rationalisation.

Notably, fertiliser stocks had rallied up to 30%-35% in recent period in anticipation of the tax rate cuts by the GST Council.