Chambal Fertilizers & Chemicals Limited — Q3 FY25 earnings call

Call held 6 Feb 2025

Management summary

Chambal Fertilisers delivered a robust Q3 FY25 performance characterized by strong volume growth in Urea and significant margin expansion in the non-urea segment (CPC & SN). The company is aggressively diversifying its portfolio into biologicals, seeds, and Technical Ammonium Nitrate (TAN) to mitigate the impact of expiring G-III urea benefits. With a cash-rich balance sheet and major capex projects like IMACID and TAN progressing on schedule, management is positioning the firm as a global phosphate player.

Highlights

  • Standalone EBITDA reached ₹843 crores, representing a 16% YoY growth.

  • Standalone Profit After Tax (PAT) stood at ₹505 crores, up 25% YoY.

  • Urea sales volumes increased to 9.88 lakh metric tons from 8.92 lakh metric tons last year.

  • Crop Protection Chemicals (CPC) and Specialty Nutrients (SN) revenue grew 26% YoY to ₹255 crores.

  • Subsidy receipts remained timely with approximately ₹3,350 crores received during Q3 FY25.

  • The company maintains a strong cash position of approximately ₹3,000 crores with zero net debt.

  • Technical Ammonium Nitrate (TAN) project is on track for commercial production in January 2026.

  • IMACID joint venture approved a $173 million expansion to increase Phos Acid capacity to 7 lakh metric tons.

Concerns

  • Expiration of G-III Urea Benefits

Key financials

  1. EBITDA (Standalone) ₹843 Cr +16%YoY
  2. PAT (Standalone) ₹505 Cr +25%YoY
  3. PAT (Consolidated) ₹534 Cr +16%YoY
  4. Urea Sales Volume 9.88 lakh metric tons +10.8%YoY
  5. Gas Cost 15.85 USD/MMBTU

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 Chemicals (CPC) & Specialty Nutrients (SN)
    ₹255 Cr Revenue₹68 Cr Contribution26% Revenue Growth
  • Urea
    9.18 lakh metric tons Production9.88 lakh metric tons Sales

Guidance & targets

Capacity

  • TAN Plant Commercial Production Capacity · FY26 · High confidence January 2026
    And we are very confident that we will be able to start the plant in January 26.

    — Abhay Baijal, Managing Director

Capex

  • IMACID Phos Acid Expansion Investment Capex · FY28 · Medium confidence $173 million
    The total investment in those areas will be about $173 million, which will be completed by '27-'28.

    — Abhay Baijal, Managing Director

Revenue

  • CPC & SN Revenue Target Revenue · FY27 · Medium confidence ₹1,750 crores (Gross)
    In that Rs. 1,750 crore number, you deflate it by about 20%, you will come to the number we are talking about.

    — Abhay Baijal, Managing Director

  • Biologicals Sales Ambition Revenue · FY27-FY29 · Low confidence ₹300 - 400 crores
    And there is a very large ambition out there to go up to almost Rs. 300 - 400 crore of biologicals sales.

    — Abhay Baijal, Managing Director

Volume

  • Urea Volume Reduction (Turnaround) Volume · Q4 FY25 · High confidence 1 - 1.5 lakh tons
    So, I would guess between 1 lakh to 1.5 lakhs tons [lower than normal run rate].

    — Abhay Baijal, Managing Director

Risks & concerns

  • Expiration of G-III Urea Benefits

    high

    Management is looking at growth projects (TAN, Biologicals, Seeds) to compensate for the eventual reduction in urea subsidies.

    Analyst acknowledged

  • Urea Volume Hit in Q4

    medium

    Annual turnaround of Gadepan-III will reduce production by ~3,900 tons per day for 30 days.

    Management acknowledged

  • TAN Market Oversupply

    low

    Competitors are also expanding TAN capacity, but management believes Chambal's cost structure will provide a competitive edge.

    Analyst downplayed

Areas of evasion (2)

  • Specific EBITDA per ton expectations for the TAN project.
  • Exact volume vs price breakup for CPC segment growth (referred to offline discussion).

Q&A highlights

2 direct
DAP Trading Profitability Direct
DAP is a zero-sum game at the moment... we have done what we felt was necessary to keep the channel lubricated.

Confirms that the company is not making margins on DAP trading and is only doing it to maintain its distribution network.

Asked by Prashant Biyani, Elara Securities

TAN Project Delay and Configuration Direct
We have made a provision to install LDAN equipment alongside the original configuration... to create that position we had to change the equipment orientation and do some re-engineering.

Explains the strategic shift to include Low Density Ammonium Nitrate (LDAN) to avoid future long-term shutdowns, even at the cost of a slight delay.

Asked by Harmish Desai, Phillip Capital

CPC & SN Margin Discrepancy Partial
It is represented on gross basis or net basis... when we are doing it in the segment results, it is on net basis.

Clarifies the reporting difference between presentation targets (gross) and financial results (net), which impacts perceived margin percentages.

Asked by S. Ramesh, Nirmal Bang

2 min read 5 chapters

Detailed narrative

Strategic Pivot to Non-Urea Segments

Chambal is aggressively scaling its Crop Protection Chemicals (CPC) and Specialty Nutrients (SN) business, which saw a 26% YoY revenue increase to ₹255 crores this quarter. The company has set a target of ₹1,750 crores in gross revenue for this segment by FY27. Management is also entering the seeds market, with plans to market hybrid wheat, mustard, and millet starting in Kharif '25, aiming to complete their agro-inputs profile.

TAN Project Re-engineering for Future-Proofing

The Technical Ammonium Nitrate (TAN) project has undergone a configuration change to include Low Density Ammonium Nitrate (LDAN) capabilities. While this required re-engineering and equipment re-orientation, management believes it prevents a future 4-10 month shutdown for upgrades. The plant is now scheduled for commercial production in January 2026, with cumulative expenditure reaching ₹541 crores as of January 2025.

IMACID Expansion and Global Phosphate Ambitions

The IMACID joint venture has approved a $173 million expansion to increase Phosphoric Acid capacity from 5 lakh to 7 lakh metric tons by FY28. Crucially, Chambal does not need to invest fresh capital as the JV has sufficient internal cash. This expansion is part of a broader strategy to secure the phosphate supply chain and transition Chambal into a global phosphate player.

Urea Operational Excellence and Q4 Outlook

Urea units operated at optimal capacity with production at 9.18 lakh metric tons. However, Q4 FY25 will see a volume reduction of 1 to 1.5 lakh tons due to a planned 30-day turnaround at the Gadepan-III unit. Energy efficiency improved by 3%, which management estimates translates to a saving of roughly ₹5,000 per Gcal, though some gains are shared with the government under the subsidy formula.

Strong Liquidity and Capital Allocation

The company maintains a very healthy balance sheet with approximately ₹3,000 crores in cash and no net debt. Subsidy receipts of ₹3,350 crores in Q3 have supported this liquidity. Management indicated that future capital allocation will focus on securing global phosphate supply chains and expanding the biologicals pipeline, where they have a ₹300-400 crore sales ambition by FY29.

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