India’s agriculture sector is witnessing a fresh wave of optimism, thanks to the early and strong arrival of the monsoon. A new report suggests that the positive impact of this early monsoon is likely to translate into 10 to 15 percent growth across agri-linked sectors, both directly and indirectly, in the first quarter of FY26.
In an unusual shift, the monsoon reached Kerala eight days ahead of schedule — something that hasn’t occurred since 2009. The early onset has helped in the swift advancement of rains across the country, raising hopes for a strong kharif sowing season. A robust monsoon not only boosts agricultural output but also lifts rural income, which is expected to rise by 5 to 7 percent in the near term.
This early boost is expected to benefit a range of sectors. Tractor demand is expected to remain resilient due to improved sowing activities and higher rural liquidity. Companies like Escorts Kubota and Mahindra & Mahindra are seen as strong beneficiaries. Agri-input companies dealing with fertilizers, agrochemicals, and seeds are also set to gain. Notable players to watch include Insecticides India, Mahindra EPC, and Finolex Pipes.
Rural-focused NBFCs, which lend for farming and allied sectors, are likely to report sequential improvements in Q1 FY26. Companies like L&T Finance, Spandana Sphoorty, and Mahindra Finance may show positive momentum, with further acceleration expected by Q3. Microfinance institutions, despite facing stress in the past, could see relief due to improved rural cash flow and loan repayment capacity.
FMCG majors such as Dabur, Marico, and Britannia are also expected to benefit from rising rural consumption. Brokerage reports suggest that these companies could report sequential volume growth in Q1 FY26, driven by higher demand from rural regions.
Market experts believe that this is a golden time to focus on agri-related plays. According to analysts, companies tied to the agriculture economy are poised to benefit as rural prosperity returns post-monsoon. Some of the recommended agri-themed stocks include VST Tillers, Insecticides India, Mahindra EPC, Indian Hume Pipe, and Finolex Pipes. These stocks are already performing well and are expected to continue their momentum due to the expected surge in demand.
One of the surprising bright spots this season could be microfinance institutions. Despite ongoing concerns in the sector, experts feel that a good monsoon may lead to increased income levels in rural households, improving both demand for loans and repayment capacity. As microfinance typically deals with small-ticket loans in rural areas, any uptick in rural prosperity directly improves their asset quality and business outlook.
With forecasts now indicating an above-normal monsoon, there’s a growing sentiment that this will be a turnaround quarter for agri-linked sectors. As a result, market watchers recommend keeping an eye on agriculture-focused companies across tractors, agri-inputs, microfinance, NBFCs, and FMCG. A 10 to 15 percent growth in Q1 FY26 isn’t just a possibility — it's an increasingly realistic scenario, provided the monsoon continues to perform as expected.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with your investment advisor before making any investment decisions. The stock names mentioned are purely based on analyst commentary and are not recommendations.
