Stocks to buy: Chambal Fertilisers, RCF among three fertiliser stock picks with up to 113% upside potential

The fertilizer sector is preparing for a big rally as there is bullish structural confirmation in the long-term charts of select fertilizer stocks that are catching strong attention. The fertilizer sector has shown a mixed performance in recent years and is currently showing the first signs of leadership in the high-beta sector. 

The basket stocks have formed higher tops and bottoms on the medium-term charts that hint at a probable trend change and resumption of the uptrend. The overall theme looks positive and suggests that a major uptrend will unfold in the coming years and a new sector is likely to emerge from the PSE space, said Manav Chopra, CMT, Nuvama Institutional Equities.

Chopra has listed out three fertilizer stocks to buy, expecting an upside potential of up to 113%. These stocks to buy include Chambal Fertilisers & Chemicals, National Fertilisers and Rashtriya Chemicals & Fertilizers (RCF).

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All these stocks rallied up to 11% on Tuesday, hitting their respective 52-week highs. RCF share price jumped over 11%, while National Fertilisers shares rallied over 9% and Chambal Fertilisers shares surged more than 8%.

Here are the technical stocks picks in the fertiliser sector:

Chambal Fertilisers & Chemicals | Buy | TP: ₹765

In the past, Chambal Fertilizer has doubled within 16-18 months of breaking above the 52-week highs. The current setup points to a strong uptrend with the formation of a reversal candle and momentum indicators confirming a new high for the stock, Nuvama Equities said.

The brokerage has a ‘Buy’ call on Chambal Fertilisers shares and a first target price of ₹580 and second target price of ₹765, implying an upside potential of 75% from Tuesday’s closing price.

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National Fertilizers | Buy | TP: ₹255

National Fertilizers stock has been in the consolidation phase for the past few weeks as it held support clusters of ₹110 - 100 zone above the 50 SMA and has absorbed the selling pressure in weak markets. The Multi-frame analysis indicates resumption of the uptrend and hints at a new swing high in the making, said the brokerage firm.

It has a ‘Buy’ rating on National Fertilizers shares with a first target at ₹185 and second at ₹255 per share, expecting an upside of 110%.

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RCF | Buy | TP: ₹370

RCF share price breakout from the 16-year resistance zone pattern has formed a higher base formation around the ₹140-130 levels zone that reaffirms the change in polarity i.e. previous resistance now acting as a support zone. There is the emergence of multiple bullish candlesticks on the charts that further validate the presence of bulls.

RCF stock has held above the ₹150-140 long term support levels and indicates demand at the lower levels. MACD Bullish crossover formation above the zero line along with the horizontal trendline breakout in price reaffirms the bullish setup in place. The volume spikes indicate a strong undertone and a sustained move above ₹180 levels will witness fresh momentum, according to Nuvama Equities.

It has a ‘Buy’ rating on RCF shares with a target price of ₹275 and second target price of ₹370, an upside potential of 113%.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.