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Agri Sector Faces Soft Q3 as Seasonal Factors, Excess Rain Hit Demand

A Nuvama report indicates agri-sector companies are poised for a soft Q3FY26 performance, primarily due to seasonal factors. Excess rainfall in August and September 2025 disrupted spraying cycles for agrochemicals, leading to sales returns and piled-up channel stock. Although Rabi sowing shows broad-based growth with oilseeds acreage up 3.2%, these benefits are expected in later quarters. The current quarter is marked by inventory correction efforts, limiting fresh dispatches and revenue growth despite supportive long-term fundamentals.

Key Points: Agri Companies to Report Soft Q3FY26: Nuvama

  • Seasonal factors dampen Q3 performance
  • Excess rainfall disrupted agrochemical spraying
  • High channel inventory weighs on volume growth
  • Rabi sowing strong but benefits delayed
3 min read

Agri sector companies likely to report soft Q3FY26 performance due to seasonal factors: Nuvama

Nuvama report forecasts muted Q3 for agri-input firms due to seasonal let-down, excess rainfall disrupting spraying, and high channel inventory.

"Soft quarter due to seasonal let-down. Companies exposed to the domestic agriculture are likely to report a muted quarter - Nuvama report"

New Delhi, January 9

Companies operating in the agriculture sector are expected to report a soft quarterly performance in the third quarter of FY26 due to a seasonal let-down, highlighted a report by Nuvama.

The report said that companies with exposure to the domestic agriculture market are likely to post muted results in Q3FY26, despite positive underlying indicators such as healthy reservoir levels and favourable trends in Rabi sowing.

It stated "Soft quarter due to seasonal let-down. Companies exposed to the domestic agriculture are likely to report a muted quarter"

According to Nuvama, the quarter is expected to remain weak mainly due to seasonal factors affecting demand and sales volumes.

The report noted agrochemical companies are anticipated to record a decline in volumes, largely due to excess rainfall during August 2025 and September 2025. The heavy rains led to missed spraying cycles of agrochemicals, which in turn resulted in sales returns and higher channel stock.

While agricultural fundamentals such as soil moisture content and reservoir levels remain supportive, these factors are unlikely to translate into immediate volume growth for agrochemical companies during the quarter.

The report highlighted that higher levels of channel inventory in the Indian trade are expected to weigh on volume growth in Q3FY26.

Nuvama estimated that the industry will witness a negative to flattish volume performance during the quarter. This is despite strong progress in Rabi sowing, which has been reporting broad-based growth across crops.

The report pointed out that all major crops have recorded higher acreage during the Rabi season. Oilseeds stood out with the strongest growth in acreage, rising by 3.2 per cent.

However, it cautioned that the benefits of higher acreage and favourable sowing conditions may be realised only in subsequent quarters.

The report further explained that excess rainfall in August and September disrupted normal crop protection practices, particularly spraying schedules for agrochemicals.

This disruption reduced near-term demand and contributed to inventory build-up at the distributor and retailer levels.

The report added that the current quarter is also marked by efforts from companies to correct channel inventory levels, which is expected to limit fresh dispatches and weigh on revenue growth.

Overall, the report said that while the medium-term outlook for the agriculture sector remains supported by good sowing trends and healthy moisture conditions, Q3FY26 is likely to remain a challenging quarter for agri-input companies due to seasonal factors, excess inventory, and the impact of unseasonal rainfall.

- ANI

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Reader Comments

S
Shreya B
As someone from a farming family in Punjab, I can confirm the disruption was real. Too much rain at the wrong time. But the report is correct, the fundamentals are strong. Reservoir levels are good, which is crucial for the summer. Companies need to manage inventory better though.
D
David E
Interesting analysis. It highlights the lag between good agricultural indicators (sowing, moisture) and corporate financial performance. The inventory correction phase is painful but necessary for healthier growth later. A classic case of short-term pain for long-term gain.
P
Priyanka N
The focus is always on companies and their quarterly results. What about the actual farmers dealing with this volatility? The report mentions "sales returns" – does that mean farmers are returning products? That's a loss for them too. The system needs more resilience.
A
Aman W
Oilseeds acreage up by 3.2% is great news! 🎯 Atmanirbhar Bharat in action. Once this inventory is cleared and the new crop comes in, the sector should bounce back strong. Monsoon patterns are becoming unpredictable, companies need to adapt their supply chains.
K
Kavitha C
A soft quarter was expected. My husband works with a fertiliser distributor in UP, and they have been sitting on high stock since October. No one is buying because the spraying window was missed. Hope the government's MSP announcements for Rabi crops boost farmer sentiment and spending soon.

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