Deepak Fertilizers and Petrochemicals Corporation Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Deepak Fertilisers reported a strong Q1 FY26, marked by robust revenue and profit growth, alongside significant improvements in EBITDA margins and debt reduction. Strategic projects like Gopalpur TAN and Dahej acid are progressing well towards Q4 FY26 commissioning. The company's shift towards specialty products continues to yield higher margins, and a favorable ITAT ruling provided substantial regulatory clarity.

Highlights

  • Revenue of ₹2,659 crores, up 17% YoY, driven by broad-based growth.

  • EBITDA of ₹513 crores, up 10% YoY, with EBITDA margin improving to 19.3% (130 bps increase YoY).

  • Net Profit grew 22% YoY to ₹244 crores, with a PAT margin of 9.1%.

  • Net debt reduced by over ₹225 crores, improving net debt-to-EBITDA ratio from 1.72x to 1.5x.

  • Fertilizer segment delivered stellar 125% YoY growth, while specialty products like Croptek saw 73% YoY growth.

  • Gopalpur TAN project is 80% complete and Dahej acid project is 57% complete, both on track for Q4 FY26 commissioning.

  • Favorable ITAT ruling deleted tax demand of ₹581 crores and penalty of ₹479 crores.

  • Increased stake in Australian subsidiary (Platinum Blasting Services) from 65% to 85%.

Key financials

  1. Revenue ₹2,659 Cr +17%YoY
  2. EBITDA ₹513 Cr +10%YoY
  3. EBITDA Margin 19.3%
  4. Net Profit (PAT) ₹244 Cr +22%YoY
  5. PAT Margin 9.1%

What they filed

Q1 FY27: revenue up 22.5%, net profit up 100.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,747 2,579 2,667 2,659 3,006 +9%2,830 +10%3,011 +13%3,256 +22%
EBITDA494 486 480 513 464 −6%353 −27%354 −26%845 +65%
Net profit214 253 278 244 214 +0%141 −44%139 −50%490 +101%
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

  • Fertilizer Segment
    1.25 decimal_fraction Y-o-Y Growth
  • Chemical Segment
    -0.09 decimal_fraction Profit Decline Y-o-Y
  • Crop Nutrition Business (CNB)
    1.8 lakh metric tonnes Manufactured Bulk Fertilizer Sales0.03 decimal_fraction Manufactured Bulk Fertilizer Sales Y-o-Y Growth0.73 decimal_fraction Croptek Y-o-Y Growth0.21 decimal_fraction Specialty Fertilizers Y-o-Y Growth0.99 decimal_fraction Specialty Fertilizers Q-o-Q Growth
  • Mining Chemical Business
    146 Kt Sales Volume0.07 decimal_fraction Sales Volume Y-o-Y Growth-0.15 decimal_fraction LDAN Volume Decline Y-o-Y0.15 decimal_fraction B2C Volume Q-o-Q Growth-0.02 decimal_fraction B2C Volume Decline Y-o-Y
  • Industrial Chemicals Segment
    74 Kt Nitric Acid Volume0.15 decimal_fraction Nitric Acid Volume Y-o-Y Growth0.03 decimal_fraction Nitric Acid Volume Q-o-Q Growth0.27 decimal_fraction IPA Volume Y-o-Y Growth0.51 decimal_fraction IPA Volume Q-o-Q Growth

Capital allocation

high confidence
  • Capex ₹377 Cr this quarter · ₹4,661 Cr (Combined Dahej & Gopalpur) planned
    • Gopalpur TAN project ₹1,700 Cr
    • Dahej acid project
    We invested Rs. 377 crores in CAPEX during this quarter. (Page 5) The combined investment of Rs. 4,661 crores across Dahej and Gopalpur project. (Page 7) So we have done roughly around Rs. 1,700 crores CAPEX so far. (Page 16)
  • Debt Net ₹3,078 Cr · 1.5× EBITDA
    The net debt reduced by over Rs. 225 crores, resulting into a net debt-to-EBITDA ratio improvement from 1.72x to the 1.5x, despite the CAPEX cycle still going on. (Page 3) We have successfully reduced the net debt from Rs. 3,305 crores to Rs. 3,078 crores. Our net debt-to-EBITDA ratio improved to 1.5x from 1.72x in March '25. The net debt-to-equity remain comfortable at 0.43x. (Page 5)
  • M&A Platinum Blasting Services (Australian subsidiary) Acquisition · Closed

    Enhancement of shareholding in the Australian subsidiary is also a move in the same direction as far as the Australian market goes for us, where we will be playing a much more pronounced, I would say, role in Platinum and accelerating the growth of that subsidiary company in the Australian market. (Page 10)

    The entity is profitable and contributes a decent amount to the bottom line. (Page 10)

    a few months back, we were a 65% shareholder in our Australian subsidiary company and the name is Platinum Blasting Services. A few months back we acquired 20% additional shares of that company, which has brought us to 85% as we speak. (Page 10) The last year if we talk about the total revenues of the company is around Rs. 600 crores approximate. (Page 11) And the value of that 20%, we have got the number Rs. 77 crores. (Page 12) So equity value of around Rs. 400 crores, that's what we are paid for that entity to acquire the estate. (Page 12)

Guidance & targets

Capacity

  • Gopalpur TAN and Dahej Acid Project Commissioning Capacity · Q4 FY26 · High confidence Q4 FY26
    And so, both the projects we are looking at commissioning in the Q4 FY '26. (Page 4)

    — Sailesh Mehta

  • New Plant Capacity Utilization Capacity · first year · Medium confidence ~70%
    We do see somewhere between around 70% capacity utilization in first year, that's what our number or our estimated despite our time. (Page 18)

    — Subhash Anand

Export

  • TAN Export Quota Export · per financial year · High confidence 50,000 metric tonnes per year

    Previously 20,000 tonnes → 50,000 metric tonnes per year

    So the previous quota was 2-0, 20,000 tonnes, which was valid till December 2024, that was fully exhausted. That is the first part of your question. And the new export quota which we have got from Government of India, which is 5-0, 50,000 tonnes, it is per financial year at this stage. (Page 9)

    — Tarun Sinha

Profitability

  • Ammonia EBITDA Breakeven Profitability · High confidence 300-325 Middle East FOB
    We have shared in fact in past around 300, 325 Middle East FOB, we will be at EBITDA breakeven, and around 425 we are PBT breakeven. (Page 20)

    — Subhash Anand

  • Ammonia PBT Breakeven Profitability · High confidence 425 Middle East FOB

    — Subhash Anand

  • EBITDA Margin Range Profitability · High confidence 18-20%
    No, in fact if you see our last few quarters, now we are in a range. We are currently between 18% to 20% range, because our business is a mix of three businesses and each business has their own profitability and the seasonality. So it moves within the quarter depending on which business is contributing more. But we are confident we will be able to hold our range what we have maintained so far. (Page 18)

    — Subhash Anand

Market Growth

  • Domestic TAN Market Growth Market Growth · High confidence 6-7% CAGR
    At the same time, the domestic market is projected to grow at a CAGR of anywhere around 6% to 7%, which in simple terms would mean every three years, roughly every three years, close to 250,000 to 300,000 tonnes of additional demand getting created. (Page 9)

    — Tarun Sinha

What to watch in Q2 FY26

Gopalpur TAN Project Completion

next quarter
Current 80% complete
Target Further progress towards Q4 FY26 commissioning

Why it matters

Timely commissioning of this strategic project is crucial for future capacity and revenue growth.

Gopalpur TAN project is at 80% complete stage and Dahej nitric acid project is at 57% complete. We are firmly on track to commence commercial operation by end of FY '26 and with tight control on timeliness and execution. (Page 7)

Risks & concerns

  • IPA pricing softness

    medium

    Continued softness in IPA pricing is weighing on the margins of the Industrial Chemicals segment, and this is expected to continue for some time.

    Management acknowledged

  • Potential oversupply from Coal India's entry into TAN production

    medium

    Management believes the government will prioritize production of chemicals where there is a deficit, rather than creating oversupply in the TAN market.

    Analyst downplayed

  • Seasonal impact on Q2 performance

    low

    Q2 is expected to be seasonally muted due to monsoon, which is a normal cyclical pattern.

    Management acknowledged

Q&A highlights

4 direct
EBITDA margin for TAN value-added services Partial
No. In fact, as Mr. Mehta spoke in his address, any specialty product or B2C segment do help us to have a price premium. And so this business also, we do have a differential margin portfolio to our normal TAN business to specialty or a B2C business. And that differentiation, we expect to continue because that's where we are adding value and we expect that to go further up, not come down. Because we were at a proof of concept, more we go in commercial, it will improve further.

Analyst sought specific margin figures for value-added services, but management provided a qualitative explanation of higher margins for specialty products without specific numbers, indicating a strategic focus on value over volume.

Asked by Yash Gupta

Gopalpur project capacity utilization and market tie-ups Direct
No, it does not need a tie-up, actually if you ask me. This business, so far, India is short, there's more demand than supply. So the additional capacity, what we expect will help us actually to be more self-sustained as in India. And then yes, there are many activities currently which we are picking up to ensure we have the right marketplace to fulfill or to go down in this and then place this material.

Clarified that the Gopalpur project does not require specific tie-ups due to existing demand-supply gap in India, ensuring market absorption for new capacity.

Asked by Yash Gupta

Australian subsidiary investment and financials Partial
The last year if we talk about the total revenues of the company is around Rs. 600 crores approximate. ... And the value of that 20%, we have got the number Rs. 77 crores. ... So equity value of around Rs. 400 crores, that's what we are paid for that entity to acquire the estate.

Analyst probed for specific revenue and profit figures for the Australian subsidiary after the increased stake, but management only provided revenue and the valuation of the acquired stake, not specific profit figures for the quarter.

Asked by S. Ramesh

Flatness in B2C mining revenue Direct
Do not expect this number quarter-on-quarter to improve because this is a proof of concept and we are moving in that direction. The ramp-up will take some time. So it's not a number which every quarter needs to be tracked. But directionally it gives where the company is focusing and how it's moving.

Management clarified that B2C mining revenue is part of a 'proof of concept' phase and should not be evaluated on a quarterly basis, but rather for its directional contribution to specialty focus.

Asked by S. Ramesh

Impact of Coal India's potential backward integration for TAN Direct
I am not, of course, in any of those government committees. But I can definitely say this with some comfort and confidence that these things will be looked at by the government over a period of time as to how best to put this Indian coal to which kind of use. No point creating assets and products which we already have enough of, rather focus on producing things which we have deficit of. That's where government will intervene at some stage is my view.

Analyst raised concerns about potential oversupply from Coal India's entry into TAN, but management downplayed the risk, suggesting government focus would be on deficit products rather than creating overcapacity.

Asked by S. Ramesh

IPA for semiconductors project status Partial
Not right now. We are still in our, I would say, drawing board and trying to evaluate various options, what is the right way for us to go. So, you need to wait for some more time till we make some concrete plan and come back and share with you.

Analyst inquired about the progress of the IPA for semiconductors project, and management indicated it is still in the early planning stages, implying no immediate commercialization.

Asked by Chirag Maroo

Natural gas sufficiency for ammonia plant Direct
The natural gas contract what we have is enough or more than enough what we need for our TCL or ammonia plant. So we do not have any shortfall or any further requirement of natural gas to be tied up. Our current contract is taken care for that.

Analyst sought clarity on natural gas supply for the ammonia plant, and management confirmed existing contracts are sufficient, alleviating concerns about raw material availability.

Asked by Chirag Maroo

2 min read 8 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Deepak Fertilisers reported a strong start to FY26 with a 17% year-on-year increase in revenue to ₹2,659 crores. EBITDA grew 10% to ₹513 crores, with the EBITDA margin expanding by 130 basis points to 19.3%. Net profit saw a 22% increase year-on-year, reaching ₹244 crores, despite a sequential decline attributed to a one-time reversal in the previous quarter.

Strategic Shift to Specialty Products

The company's strategy to transition from commodity to specialty products is yielding positive results, with almost 25% of the top line now emerging from this shift. This move has enabled price premiums ranging from 15% to 40% over older commodity pricing. The crop nutrition business, a key specialty segment, has shown excellent traction, contributing significantly to this growth.

Project Updates and Commissioning Timeline

Significant progress has been made on two major projects: the Gopalpur Technical Ammonium Nitrate (TAN) project is 80% complete, and the Dahej acid project is 57% complete. Both projects are on track for commercial operation by Q4 FY26. The combined investment for these projects totals ₹4,661 crores, with approximately ₹1,700 crores already invested in Gopalpur.

Operational Efficiencies and Business Resilience

Operational efficiencies (OPE) have improved from 78% to almost 86%, with some plants exceeding 93%, placing the company in a highly efficient operations category globally. Despite ammonia, a key raw material, experiencing price volatility of 10% to 200% over the last five quarters, the company's contribution margins in downstream products and consolidated EBITDA margins have remained robust at 40% plus and 18-20% respectively, demonstrating strong business resilience.

Debt Reduction and Balance Sheet Strength

The company successfully reduced its net debt by over ₹225 crores during the quarter, bringing it down from ₹3,305 crores to ₹3,078 crores. This led to an improvement in the net debt-to-EBITDA ratio from 1.72x to 1.5x, even amidst ongoing CAPEX. The net debt-to-equity ratio remains comfortable at 0.43x.

Segmental Performance Highlights

The Fertilizer segment recorded stellar year-on-year growth of 125%, driven by higher value-added products. In the Crop Nutrition Business, specialty bulk products like Croptek grew 73% year-on-year, while specialty fertilizers saw 21% year-on-year and 99% quarter-on-quarter growth. The Chemical segment's profit declined 9% year-on-year due to pricing softness in IPA and ammonia, though nitric acid and IPA volumes surged by 15% and 27% year-on-year respectively.

Australian Subsidiary and Export Quota Expansion

Deepak Fertilisers increased its stake in the Australian subsidiary, Platinum Blasting Services, from 65% to 85%, aiming for a more pronounced role in the Australian market and knowledge transfer. Additionally, the government increased the TAN export quota to 50,000 metric tonnes per year from the previous 20,000 tonnes, positioning the company for further growth in exports.

Favorable ITAT Ruling

A significant legal update saw a favorable ITAT ruling for Mahadhan Agritech Limited, deleting a tax demand totaling ₹581 crores and an associated penalty order of ₹479 crores for assessment years 2016-17 to 2021. This provides substantial regulatory clarity and financial relief for the company.

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