BASF India shares surge as Board approves Agricultural Solutions business demerger

Date:12-23-2024

Shares of BASF India rose over 5% in early trading on December 20, driven by heavy volumes following the company’s announcement of plans to spin off its agricultural solutions business into a standalone listed entity.

This decision aligns with BASF SE, the German parent company’s global strategy to restructure its agricultural solutions division by 2027. BASF SE is also exploring a potential Initial Public Offering (IPO) for this segment and may list a minority stake in the medium term, according to BASF India. The Indian subsidiary confirmed it would evaluate the impact of these changes on its local operations.

In a statement, BASF India shared that its board had given preliminary approval for the demerger, emphasizing that the move would provide operational flexibility, enhance strategic focus, and unlock value for stakeholders.

″Necessary announcements and disclosures as per SEBI Listing Regulations and applicable laws will follow after recommendations from the Independent and Audit Committees and further approval by the Board of Directors,″ the company stated.

BASF India had previously disclosed plans to streamline its global agricultural solutions segment in December 2023. This division, which contributed 17% to BASF India’s revenue in the September quarter, is second only to its nutrition and care business.

Managing Director Alexander Gerding recently highlighted that 80% of chemical market growth over the next decade is expected to come from seven countries, including India, reflecting the region’s strategic importance.

Strong Performance and Growth Outlook

BASF India boasts a market capitalization exceeding ₹25,000 crore and has seen its share price soar 90% this year. The company recorded a 15% sales growth in the September quarter, driven primarily by higher volumes. The agrochemical division performed robustly, achieving ₹1,400 crore in sales during the first half of the fiscal year, marking over 10% year-on-year growth.

The company remains optimistic about its future in India, citing strong domestic demand and favorable demographic trends.

Parent Company BASF SE Pursues Strategic Realignment

Globally, BASF SE is focusing on its core chemical, industrial, and nutrition businesses while exploring divestitures in segments such as agriculture and battery materials. CEO Markus Kamieth is steering the company through challenging economic conditions, including elevated energy costs resulting from the Russia-Ukraine conflict, with the aim of enhancing profitability and long-term sustainability.