Why KRBL Share Price is Rising

KRBL is a leading light in the global rice trade. It's in the limelight today as its share price soared by a remarkable 9%.

This unexpected surge comes amid a swirl of speculation regarding a potential policy shift in the Indian rice export market. This sudden rise comes after a period of uncertainty for the rice export sector.

Recent government regulations regarding ban on rice exports, coupled with ongoing issue like facing intense competition from rival exporters like Pakistan, had cast a shadow over the industry's prospects.

However, whispers of a potential policy shift have completely changed the narrative.

This sudden change in sentiment begs the question: what exactly is the policy driving this newfound confidence in the rice export sector.

Let's take a look:

#1 Probability of Ease in Rice Export Restriction

The recent surge in KRBL share price is largely driven by speculation about potential changes in India's rice export policies.

India, the world's largest rice exporter, has faced challenges in managing its domestic rice stocks, leading to stringent export restrictions.

These measures included a complete ban on non-basmati and broken rice exports, a 20% duty on parboiled rice, and a floor price for basmati rice. Such restrictions were aimed at ensuring adequate domestic supply and stabilising local prices.

However, reportedly the government is now considering relaxing some of these restrictions to prevent a surplus of rice stocks before the new harvest arrives in October.

Insiders indicate that the government might allow white rice shipments with a fixed duty and replace the current 20% tax on parboiled rice exports with a fixed levy. This shift aims to prevent under-invoicing and encourage more transparent export practices.

These potential policy changes could significantly impact the global rice market.

Lowering export barriers would likely increase the supply of Indian rice in international markets, potentially reducing global rice prices, which have reached 15-year highs.

This context has created a positive sentiment among investors regarding KRBL. As a leading player in the rice export industry, KRBL stands to benefit significantly from any easing of export restrictions.

#2 Favourable Monsoon

The favorable monsoon season in India is significantly enhancing the outlook for rice production across the country.

This year might saw a substantial recovery in rainfall after a previous period of deficient rains, resulting in optimal conditions for rice cultivation.

As a result, the planted rice acreage has increased by 19% compared to the previous year, reaching 6 million (m) hectares.

The Indian agricultural ministry's latest estimates project rice production to reach 136.7 million tonnes (MT) this year, an increase from last year's 135 MT.

This growth in production is crucial for maintaining a stable rice supply, both for domestic consumption and exports. The improved monsoon conditions ensure that the rice crops receive adequate water, leading to higher yields and better-quality produce.

A strong monsoon not only boosts the quantity of the rice harvest but also stabilises prices by preventing supply shortages. This stability is beneficial for the entire rice industry, allowing for better planning and pricing strategies.

Ample rice stocks, supported by favourable monsoon rains, also reduce the pressure on the government to maintain strict export restrictions, as there is less concern about domestic shortages.

For KRBL the positive impact of the monsoon translates into a reliable supply chain and opportunities for growth in export markets.

How KRBL Share Price has Performed Recently

In the past five days, KRBL share price has rallied 9.4%. In the last month, it is up 18%.

In 2024, so far its share price has tumbled 11.1% and its down 3.1% in the last one year.

The stock touched its 52-week high of Rs 471 on 8 September 2023 and a 52-week low of Rs 258 on 4 June 2024.

About KRBL

KRBL is one of the leading producers of basmati rice in the world, with operations across the basmati value chain right from seed development, farming, processing, and marketing.

India accounts for over 70% of the world's basmati rice production, with KRBL leading the market. The company's flagship brand, India Gate, is the undisputed leader in the Basmati rice genre in India and abroad.

It's also the largest rice miller in the country.

The company has a diversified product portfolio, including basmati, non-basmati rice, bran oil, furfural, rice bran, and de-oiled cakes.

It has several popular brands under its umbrella, such as India Gate, Unity, Nur Jahan, Doon, and Bemisal.

Besides food processing, KRBL also diversified into renewable energy. It has an energy production capacity of 145 megawatts (MW), which it uses for captive consumption and generating revenue.

To know more, check out KRBL company fact sheet and quarterly results.

Also check out the top rice stocks in India.

You can also compare KRBL with its peers:

KRBL vs Ruchi Soya

KRBL vs ADF Foods

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...