Chambal Fertilizers & Chemicals Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

Chambal Fertilisers delivered a strong quarter characterized by robust revenue growth driven by a strategic shift back to higher P&K trading volumes and continued momentum in the high-margin Crop Protection segment. While Urea production faced minor operational headwinds from unscheduled maintenance, the company is successfully diversifying its portfolio with the upcoming TAN plant and biological offerings. Management remains optimistic about meeting FY26 volume targets despite rising global DAP prices and a complex subsidy environment.

Highlights

  • Standalone Revenue for Q2 FY26 stood at ₹6,413 crore, a significant 47.6% YoY increase from ₹4,346 crore.

  • Profit After Tax (PAT) grew by 20% YoY to ₹602 crore compared to ₹500 crore in the previous year.

  • Crop Protection and Speciality Nutrient (CPC) revenues increased 29% YoY to ₹374 crore with a 37% growth in contribution.

  • P&K fertiliser volumes are targeted to reach 1.1 million tons for FY26, nearly doubling from 5.5 lakh tons last year.

  • Technical Ammonium Nitrate (TAN) plant is on track for January 2026 operations with ₹1,052 crore spent till Sept '25.

  • Subsidy receipts for H1 FY26 were timely at ₹6,347 crore, though DAP subsidy remains high at ₹50,000-52,000 per ton.

  • Biological business achieved 80% revenue growth in H1 FY26, reaching ₹73 crore.

  • Urea production was slightly lower at 8.81 lakh metric tons due to an unscheduled stoppage at the Gadepan-III plant.

Concerns

  • Raw Material Price Volatility

Key financials

  1. Revenue ₹6,413 Cr +47.6%YoY
  2. EBITDA ₹882 Cr +5.8%YoY
  3. PAT ₹602 Cr +20%YoY
  4. Urea Sales Volume 9.34 lakh mt -3.2%YoY

What they filed

Q1 FY27: revenue down 11.8%, net profit down 4.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,346 4,918 2,449 5,698 6,413 +48%5,898 +20%2,785 +14%5,027 −12%
EBITDA790 778 163 761 842 +7%821 +6%255 +56%826 +9%
Net profit536 534 130 549 649 +21%586 +10%169 +30%524 −5%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Crop Protection and Speciality Nutrients
    ₹374 Cr Revenue₹114 Cr Contribution29% Revenue Growth
  • Biologicals
    ₹73 Cr H1 Revenue80% H1 Revenue Growth

Guidance & targets

Capacity

  • TAN Plant Operational Commencement Capacity · Q4 FY26 · High confidence January 2026
    We have spent about Rs. 1,052 crore till September ‘25, and we are likely to begin operations as planned in January ‘26.

    — Abhay Baijal, Managing Director

  • IMACID Phosphoric Acid Capacity Capacity · by December 2026 · Medium confidence 7 lakh metric tons

    From 5 lakh metric tons today

    The increase in the phosphoric acid capacity from 5 lakh metric tons to 7 lakhs metric tons is expected to be implemented by December ‘26

    — Abhay Baijal, Managing Director

Volume

  • P&K Fertiliser Annual Tonnage Volume · FY26 · High confidence 1.1 million tons

    From 0.55 million tons today

    we would be touching almost 1.1 million tons or so this year, which is quite a growth from last year, which is almost from 5.5 lakh tons to almost 11 lakh tons.

    — Abhay Baijal, Managing Director

Other

  • Digital Farmer Connect Subscribers Other · by next year · Medium confidence 3 to 5 lakh

    From 80,000-90,000 today

    we have a very stiff target in terms of having 3 to 5 lakh subscribers on this, which we should achieve by next year.

    — Abhay Baijal, Managing Director

Risks & concerns

  • Raw Material Price Volatility

    high

    Global DAP prices rose from $650 to $850, limiting pass-through ability and threatening P&K margins.

    Management acknowledged

  • Operational Stoppages

    medium

    Unscheduled stoppages at Gadepan-II (syngas compressor) and Gadepan-III (scrapper arm) led to a ~60,000-70,000 ton urea production shortfall in H1.

    Both acknowledged

  • Subsidy Receivable Accumulation

    medium

    High DAP subsidy (₹50k-52k/ton) leads to working capital buildup; receivables increased by ₹2,100 crore this quarter.

    Analyst acknowledged

  • GST Litigation

    low

    Management views the GST notice on subsidy in Bihar as 'frivolous' and expects it to be overturned in court.

    Analyst downplayed

Q&A highlights

2 direct
TAN Plant Break-even and Profitability Direct
if you see the current numbers and the cost of ammonia that we have, it's a healthy four-digit, five-digit margin in this business.

Reveals the strong unit economics of the upcoming TAN project due to captive ammonia advantage.

Asked by Keshav Garg, Counter Cyclical Investments

Sustainability of High Crop Protection Margins Direct
The reason for this is two or threefold. One is a placement strategy. And also now that we have started introducing new products... That freshness that we bring to the portfolio and the churn that we bring, that is one.

Explains how the company is maintaining ~30% margins in a traded business through product mix and brand trust.

Asked by Viraj Kacharia, Securities Investment Management

P&K Margin Compression Risks Partial
DAP was at around $650 levels to begin with... And it has gone up to a level of $850... naturally, the extent of what we can pass on to the farmer is limited. Going forward... there will be a compression in margin.

Highlights the risk of rising global raw material prices on the profitability of the traded P&K segment.

Asked by Meet Mehta, Prasun Exponentials

2 min read 5 chapters

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.

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