AI is now being used in agriculture as well. Keep an eye on these 4 stocks, you could benefit!

For centuries, the biggest challenge facing agriculture in India has been low productivity. Inefficient water use, a lack of modern machinery, and a significant dependence on the monsoon have always hampered the agricultural sector. 

However, this landscape is rapidly changing. Advanced technologies like artificial intelligence (AI), drones, and precision farming are now reaching the farm directly.

The government is also fully supporting this technological shift through initiatives like the Rashtriya Krishi Vikas Yojana (RKVY). Its simple goal is to make farming more efficient and profitable, not just limiting it to large acreage. 

This major shift in the agri-tech ecosystem is directly benefiting companies that are solving long-standing problems in agriculture through technology. Let's take a closer look at the companies leading this agri-tech revolution.

1- UPL

UPL, one of the world's leading agro-chemical and seed producing companies, is now moving strongly towards an agri-tech-based business model. The company's performance in the December quarter was quite encouraging, with revenue increasing 12 percent to over ₹12,269 crore. 

This impressive volume growth was primarily driven by strong demand for its products in Europe and Latin America. Although net profit declined to ₹490 crore from ₹853 crore last year, this represents a clear improvement over the past few weak quarters. T

he company's operating margin has also improved to approximately 18 percent. Most notably, UPL's seed business, Advanta, is growing at a rate of over 20 percent, and the company is preparing to unlock significant value for investors by launching its IPO soon.

2-PI Industries

PI Industries has a strong presence in both domestic and international markets. It boasts a modern manufacturing facility and an excellent research facility in Gujarat. However, the recent December quarter proved somewhat challenging for the company. 

Weak global demand and sluggish customer purchases led to a decline in revenue from ₹1,901 crore to ₹1,376 crore. Profits also declined from ₹373 crore to ₹311 crore. 

Despite this, the company largely protected its profits thanks to excellent cost management and a 50% increase in its pharmaceutical business. The company's future strategy is clear. 

It has already launched five new molecules and, while remaining completely debt-free, plans to invest ₹500 to ₹600 crore in expanding new technologies by fiscal year 2027.

3- Kaveri Seed

Kaveri Seed Company, which has been operating in the hybrid seed market since 1976, has consistently focused on research and development (R&D). Despite the direct impact of weather and crop cycles on the seed business in the agricultural sector, the company saw a remarkable increase of approximately 21 percent in its revenue, reaching ₹210 crore (approximately $2.1 billion). 

Maize, rice, and vegetable seeds are experiencing strong market demand. However, its net profit fell slightly from ₹15 crore (approximately $1.3 billion) to ₹13 crore (approximately $1.5 billion) due to its inability to fully pass on rising production costs to farmers. 

The company spends 5 to 10 percent of its revenue on innovative research, ensuring a strong pipeline of new hybrid seeds for the future. The company's revenue is also growing rapidly in foreign markets.

4- Jain Irrigation Systems

Jain Irrigation Systems' micro-irrigation and solar pump tools are gaining popularity for their precise and effective water use in fields. The company's revenue jumped 17 percent year-on-year to reach ₹1,600 crore. 

The most significant change is that the company's retail business has grown by approximately 24 percent. This is reducing the company's dependence on government projects and significantly improving its working capital. 

Although the company suffered a loss of ₹47 crore this quarter due to one-time expenses, management is continuously investing in new high-tech segments. 

The company's beverage manufacturing plant has become operational, and a tomato processing joint venture is expected to generate strong earnings by the next fiscal year (FY27).

Should you bet on these stocks?

From an investment perspective, the agri-tech theme appears to be extremely strong and secure in the long term. The need to increase productivity in agriculture will always remain, and technology is the best solution. 

However, as an investor, you need to be cautious. Each company's financial situation is different. Some companies have strong fundamentals, 

while others are currently undergoing a period of improvement. Before investing in the stock market, be sure to thoroughly analyze these companies' balance sheets, margins, and sources of income.