Sometimes, what might appear to be negative development might actually be a sign that the worst is behind the sector. Fertilizer as a sector, both in the business and valuation side has been under performer. The fact is that in the last nine, the government has been making changes in policies which brings this sector out of the clutches of high government subsidy and other age old issues plaguing the sector. Now unlike other sectors like railways where putting more money or making few policy changes has helped the sector, fertilizer is a more complex sector and is bound to take more time for getting the house in order. A balance has to be maintained so that while the operating matrix of the industry improves but at the same time, neither the supply should get disrupted, nor the prices of fertilizer should see a jump to the farmer. What needs to be watched is when companies show the impact of all that has been going on in the sector, sooner or a bit later. To be fair, everything has not been a smooth ride for these companies. But then who says that transition for good is painless.
