* Q1 net income up 29 pct year on year * Sees Indian demand recovering * Sees high grains prices driving demand * GDRs up 1.7 pct (Adds details, quotes, background) MOSCOW, June 18 (Reuters) - Russian fertiliser group Phosagro predicted high grain prices would continue to drive to demand as it reported a 29 percent year-on-year rise in first-quarter net income.
Net profit at the world's second-largest phosphate producer after Minnesota-based Mosaic Co rose to $266 million in January-March, the company said on Monday.
Sales climbed to $856 million, while adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) edged up to $313 million.
The fertiliser industry has been a hot sector for investors over the last year, as the world's rising population and unpredictable weather patterns have piled pressure on food supplies.
Phosagro, which raised $538 million in a London IPO in 2011, plans to increase fertiliser production and sales in 2012 and said it believes the market will remain stable.
During the first quarter Russia, Europe, the United States and Brazil showed very strong demand, while the Indian market was challenging, Phosagro said.
Indian demand is recovering, however, and Phosagro does not expect any serious slowdowns this year, while record planting acreage and historically high prices for key grains will drive demand for fertilisers, the company added.
Phosagro's global depository receipts (GDRs) began to rise after the statement and were up 1.7 percent at $10.55 by 0906 GMT, compared with an IPO price of $14 per share. (Reporting by Polina Devitt; Editing by Lidia Kelly and Mark Potter)