Detailed Narrative
P&K Segment Drives Revenue Surge
The company saw a massive 47.6% jump in Q2 revenue, primarily driven by a strategic increase in P&K fertiliser trading. Management is targeting 1.1 million tons of P&K sales for FY26, a 100% increase from the 5.5 lakh tons achieved in the previous year. This growth is supported by an enabling subsidy framework, although rising global DAP prices from $650 to $850 per ton are expected to compress margins in the second half of the year.
TAN Project Nears Completion
The Technical Ammonium Nitrate (TAN) plant is progressing according to schedule with ₹1,052 crore already invested. Trial runs for nitric acid are slated for December 2025, with full plant operations expected in January 2026. Management anticipates the product will hit the market by mid-February 2026 and expects a quick break-even due to a domestic supply shortage and the strategic advantage of captive ammonia feed.
High-Margin Crop Protection Momentum
The Crop Protection and Speciality Nutrient business continues to be a star performer, with Q2 revenues growing 29% YoY to ₹374 crore. More impressively, the segment's contribution grew by 37%, maintaining high operating margins of approximately 30%. This performance is attributed to a successful placement strategy and the introduction of 22 new products in the first half of the year, which now contribute roughly 30% to segment volumes.
Operational Hurdles in Urea Manufacturing
Urea production in Q2 was 8.81 lakh metric tons, down from 9.09 lakh metric tons last year, due to an unscheduled stoppage at the Gadepan-III plant caused by a broken scrapper arm. Combined with earlier syngas compressor issues at Gadepan-II, the total production shortfall for H1 stands at approximately 60,000-70,000 tons. Management expects to recover some of this volume through Gadepan-I and III, though Gadepan-II faces a planned turnaround in February 2026.
Subsidy and Working Capital Dynamics
Subsidy receipts remained timely at ₹6,347 crore for the half-year. However, the high quantum of subsidy on DAP (over ₹50,000 per ton) has led to a temporary accumulation of receivables, which increased by ₹2,100 crore. Management expects these to liquidate as stocks move through the Point of Sale (POS) system by the end of December, normalizing the cash-to-cash cycle by Q4.