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    Deepak Fertiliz.

    DEEPAKFERT
    Chemicals·30 Jan 2026
    Management Summary

    Deepak Fertilisers faced a challenging Q3 FY26 due to extended rains, geopolitical uncertainties, and price volatility, impacting profitability. Despite this, the company demonstrated resilience through its diversified portfolio and continued strong execution on major capex projects. Management expects future growth driven by new capacities and cost savings from a long-term LNG contract, while navigating ongoing market softness in segments like IPA.

    Highlights

    8

    • Consolidated operating revenue for Q3 FY26 stood at INR2,830 crores, reflecting a 10% Y-o-Y growth.

    • Year-to-date FY26 revenue reached INR8,495 crores, up 12% Y-o-Y.

    • Q3 EBITDA came in at INR353 crores, a 27% Y-o-Y decline, primarily due to higher raw material costs.

    • Adjusted PAT for Q3 was INR141 crores, down 34% Y-o-Y after normalizing for a one-time tax credit.

    • The net debt-to-EBITDA ratio stands at 2.27x, aligned with the ongoing capex cycle.

    • Gopalpur TAN project is 91% complete, and Dahej acid project is 79% complete, both expected to contribute to the bottom line from Q1 FY27.

    • The B2C segment within Mining Chemicals continued strong momentum with 26% Y-o-Y growth in Q3.

    • Crop Nutrition revenue grew 26% Y-o-Y in Q3, with specialty fertilizer and Croptek contributing 30% of CNB revenue.

    Concerns

    3

    • Extended rains and geopolitical uncertainties

    • Softening of IPA prices

    • Inadequate subsidy support and raw material cost inflation in fertilizers

    What Changed2

    vs Q4 FY26

    Guidance items7 → 8 (+1)Risks discussed7 → 6 (-1)
    Key financials

    Metrics

    7

    Periods

    3

    Headline

    1
    • Net Debt to EBITDA
      2.27 x

    Q3 FY26

    3
    • Consolidated Operating Revenue
      ₹2,830 Cr
      YoY+10%
    • EBITDA
      ₹353 Cr
      YoY-27%
    • Adjusted PAT
      ₹141 Cr
      YoY-34%

    YTD FY26

    3
    • Consolidated Operating Revenue
      ₹8,495 Cr
      YoY+12%
    • EBITDA
      ₹1,330 Cr
      YoY-8%
    • Adjusted PAT
      ₹599 Cr
      YoY-4%

    Segment breakdown

    Mining Chemicals
    — Q3 Volumes0.26 Y-o-Y B2C Segment Growth (Q3)0.11 Y-o-Y Total TAN Volume Growth (YTD)
    IPA
    -0.26 Y-o-Y Volume Decline (Q3)— YTD Volume
    Nitric Acid
    — Q3 Volume0.04 Y-o-Y YTD Volume Growth
    Crop Nutrition (CNB)
    0.26 Y-o-Y Revenue Growth (Q3)30% Specialty Fertilizer & Croptek Contribution to CNB Revenue
    List

    Capital allocation

    3
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Net ₹4,021 crores · 2.3x EBITDA

    M&A

    Explosive manufacturer

    acquisition · announced

    Guidance & targets

    8
    CategoryTargetPriority
    Capacity
    Gopalpur TAN Project Completion
    91% completed
    		High
    Capacity
    Dahej Acid Project Completion
    79% completed
    		High
    Profitability
    Project Contribution to Bottom Line
    Contributing to bottom line
    		High
    Volume
    TAN Demand Growth Rate in India
    6% compounded average growth rate
    		High
    Volume
    Additional TAN Demand Creation
    2.5 lakh tons
    		High
    Volume
    India Coal Demand Growth
    4% to 5%
    		High
    Cost
    LNG Contract Cost Savings
    Double-digit reduction in breakeven levels
    		High
    Regulatory
    Ammonium Nitrate Export Quota Review
    May get removed eventually
    		Medium

    Gopalpur TAN project commissioning

    Q1 FY27
    Current91% complete
    TargetCommercial operations

    Why it matters

    This major capacity addition is expected to significantly contribute to the company's bottom line and enhance competitiveness.

    as I look ahead, the next quarter and mainly the year ahead, we will certainly see, I would say, at least minimum for half of the year, the TAN Gopalpur project and the acid Dahej project contributing to the bottom line.

    How to verify

    guidance_and_targets[metric='Gopalpur TAN Project Completion']

    Risks & concerns

    6
    RiskSeverity

    Extended rains and geopolitical uncertainties

    Q3 was a challenging quarter due to extended rains, geopolitical uncertainties, and price volatility, impacting mining activity and Kharif crop. — Management acknowledged

    high

    Global ammonia price increase

    Increased raw material prices for technical ammonium nitrate and nitric acid due to global ammonia price rise. — Management acknowledged

    medium

    Softening of IPA prices

    IPA prices were impacted by lower propylene prices globally and increased imports, leading to a 20-23% price correction this year, with softness expected to continue. — Management acknowledged

    high

    Excess imports and downstream dumping affecting nitric acid

    Nitric acid pricing remained under pressure from excess imports and downstream dumping from abroad. — Management acknowledged

    medium

    Potential supply glut in ammonium nitrate export market

    Analyst raised concerns about increasing ammonium nitrate exports from China and new domestic capacities creating a supply glut, which management countered with long-term India demand growth and import substitution. — Analyst downplayed

    medium

    Inadequate subsidy support and raw material cost inflation in fertilizers

    Sizable cost increases on raw materials were not adequately compensated by subsidy, impacting fertilizer segment profitability. — Management acknowledged

    high

    Q&A highlights

    8

    “the demand growth in India, which is driven by mining and infrastructure largely for our products, for TAN products, is likely to be in the range of 6% compounded average growth rate over the course of next 5 to 6 years at least that we can see. On the other hand, the country imports at this point in time close to 4 lakh tons of ammonium nitrate, which will have to slowly reduce with the domestic capacities coming in.”

    Analyst raised concerns about potential oversupply with new capacities, which management addressed by highlighting strong demand growth and import substitution opportunities.

    asked by Niraj Mansingka

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 FY26 Financial Performance Overview

    Deepak Fertilisers reported a consolidated operating revenue of INR2,830 crores for Q3 FY26, marking a 10% year-on-year growth. Year-to-date revenue reached INR8,495 crores, up 12% YoY. Despite revenue growth, profitability was impacted, with Q3 EBITDA declining 27% YoY to INR353 crores and adjusted PAT falling 34% YoY to INR141 crores, primarily due to higher raw material costs and insufficient subsidy support. The company's net debt-to-EBITDA ratio stands at 2.27x, reflecting its ongoing capex cycle.

    02

    Segmental Performance and Market Challenges

    The Mining Chemicals segment saw largely flat volumes in Q3, although the B2C sub-segment demonstrated strong momentum with 26% YoY growth. The IPA segment experienced a 26% volume decline in Q3 due to a planned shutdown and weak acetone prices, with management anticipating continued softness. Nitric acid volumes remained steady but faced pricing pressure from excess imports. Crop Nutrition revenue grew 26% in Q3, but delayed Rabi sowing and heavy monsoon impacted the uptake of higher-margin specialty products, leading to an unfavorable product mix.

    03

    Strategic Resilience and Portfolio Transformation

    Management emphasized the company's enhanced resilience in navigating volatile market cycles, attributing it to a transformed portfolio, strengthened operating model, and improved customer engagement. The diversified product basket, spanning from gas to ammonia and downstream products, acts as a risk mitigator. The company's strategic alignment with India's growth story and its continued shift from commodity to specialty products, often combining products with services, are key drivers for long-term value creation.

    04

    Major Project Execution and Future Contribution

    Significant progress has been made on key capital projects, with the Gopalpur technical ammonium nitrate project now 91% complete and the Dahej acid project 79% complete. Both projects are on track for commissioning in Q1 FY27. These new capacities are expected to contribute to the bottom line for at least half of the upcoming year, laying a strong foundation for future growth and enhanced competitiveness by materially improving margin resilience.

    05

    LNG Contract and Cost Optimization

    A new 15-year long-term LNG contract with a Norwegian giant is set to commence in Q1 FY27. This contract is anticipated to provide substantial cost savings in gas prices, leading to a double-digit percentage reduction in overall breakeven levels. This strategic move is expected to significantly improve the profitability of the PCL segment, which currently operates at a breakeven EBITDA of around USD430 FOBME after recent GST reductions.

    06

    Explosive Manufacturer Acquisition Strategy

    Deepak Fertilisers has signed an agreement to acquire an explosive manufacturer, a move aimed at producing differentiated, value-adding products for the mining industry. This acquisition is part of the company's broader strategy to enhance its position as a solutions provider and expand its export business. The transaction is subject to due diligence and other conditions, but it aligns with the company's focus on downstream integration and strengthening its offerings in the mining sector.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.