Deepak Fertilizers and Petrochemicals Corporation Limited — Q3 FY26 earnings call

Call held 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

  • 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

  • Extended rains and geopolitical uncertainties

  • Softening of IPA prices

  • Inadequate subsidy support and raw material cost inflation in fertilizers

Key financials

3 periods

Headline

  • Net Debt to EBITDA
    2.27×

Q3 FY26

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

YTD FY26

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

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

  • 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

Capital allocation

high confidence
  • Capex Capex disclosed
    • Gopalpur TAN project
    • Dahej-II nitric acid project
    On the investment front, YTD capex is around INR1,495 crores, largely directed towards Gopalpur TAN and Dahej-II nitric acid project.
  • Debt Net ₹4,021 Cr · 2.3× EBITDA
    Our net debt-to-EBITDA ratio today stands at 2.27x, fully aligned with our ongoing capex cycle, which is in its last leg of execution. And it is going to be laying the foundation for our future growth and enhanced competitiveness.
  • M&A Explosive manufacturer Acquisition · Announced

    To produce differentiated value-adding products for the mining industry, enhance solutions provider journey, and support export business.

    Okay. So first is we have not yet acquired the company. As you mentioned -- I think you said you have acquired. The answer is no, we haven't. What we have done is we have signed an agreement to acquire. So that's the first clarification. And the acquisition will be subject to certain due diligence and conditions, precedents, as we say, being fulfilled, after which if everything goes to our satisfaction, then the transaction will go through. And that would mark the acquisition. So that's one clarification. Now, if that goes through under that assumption, what's the purpose of that? The purpose is basically for us to -- for DMSL to produce differentiated value-adding kind of products to help enhance our journey in the mining industry as a solutions provider and also help in terms of our export business.

Guidance & targets

Capacity

  • Gopalpur TAN Project Completion Capacity · As of Jan 30, 2026 · High confidence 91% completed
    we are forging ahead with now almost 91% completion of our Gopalpur technical ammonium nitrate project

    — Sailesh Mehta

  • Dahej Acid Project Completion Capacity · As of Jan 30, 2026 · High confidence 79% completed
    and around 79% completion of our Dahej acid project.

    — Sailesh Mehta

Profitability

  • Project Contribution to Bottom Line Profitability · Next quarter and mainly the year ahead (at least minimum for half of the year) · High confidence Contributing to bottom line
    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.

    — Sailesh Mehta

Volume

  • TAN Demand Growth Rate in India Volume · Next 5 to 6 years · High confidence 6% compounded average growth rate
    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.

    — Tarun Sinha

  • Additional TAN Demand Creation Volume · Every 3 years or so · High confidence 2.5 lakh tons
    additional demand creation of around 2.5 lakh tons of TAN will take place.

    — Tarun Sinha

  • India Coal Demand Growth Volume · Long-term · High confidence 4% to 5%
    the demand for coal is going to go up around 4% to 5%.

    — Subhash Anand

Cost

  • LNG Contract Cost Savings Cost · From next year quarter 1 · High confidence Double-digit reduction in breakeven levels
    Our new Equinor contract is coming in place from next year quarter 1. That will give us a, I'd say, decent cost saving in terms of gas prices are concerned and will bring the overall breakeven levels significantly down from where the ammonia currently or PCL is currently operating.

    — Subhash Anand

Regulatory

  • Ammonium Nitrate Export Quota Review Regulatory · Based on ongoing discussions · Medium confidence May get removed eventually
    Hence, there is a very strong case for reviewing this 50,000 tons per year of export quota. And if things goes as per the plan based on the way the discussions have gone by, this quota may also get removed eventually.

    — Tarun Sinha

What to watch in Q4 FY26

Gopalpur TAN project commissioning

Q1 FY27
Current 91% complete
Target Commercial 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.

Risks & concerns

  • Extended rains and geopolitical uncertainties

    high

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

    Management acknowledged

  • Softening of IPA prices

    high

    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

  • Inadequate subsidy support and raw material cost inflation in fertilizers

    high

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

    Management acknowledged

  • Global ammonia price increase

    medium

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

    Management acknowledged

  • Excess imports and downstream dumping affecting nitric acid

    medium

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

    Management acknowledged

  • Potential supply glut in ammonium nitrate export market

    medium

    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

Q&A highlights

7 direct
Impact of new TAN and ammonia projects on India's demand-supply equation Direct
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

Savings from the long-term LNG contract Direct
Our new Equinor contract is coming in place from next year quarter 1. That will give us a, I'd say, decent cost saving in terms of gas prices are concerned and will bring the overall breakeven levels significantly down from where the ammonia currently or PCL is currently operating.

Quantifies the positive financial impact of the new LNG contract on the company's cost structure and profitability, indicating a significant improvement.

Asked by Niraj Mansingka

Outlook for IPA business and acetone price volatility Direct
The IPA business price volatility is, I call it, severe at this point of time... price reduction in this year is almost around 20 roughly around 22%, 23%... But pricing pressure, which is there in IPA business, expected to continue for some more time, although the slower recovery has started, I call it. But we don't see immediate quick turnaround of IPA prices happening in a quarter or 2. It will take some time to come back to a normal.

Provides clarity on the challenges faced by the IPA segment due to price volatility and imports, and sets expectations for continued softness in the near term.

Asked by Shubham Dhasmana

Concentration risk in the TAN business Partial
our market share is almost around 40% what we hold in this business. And any customer you talk about in TAN business, we are supplying to them. So they know -- almost every customer is covered by us.

Analyst inquired about customer concentration, and management responded by emphasizing broad market coverage and significant market share without disclosing specific customer details.

Asked by Shubham Dhasmana

Concerns about supply glut in ammonium nitrate and nitric acid due to China exports and new capacities Direct
Pratyush, you need to see industry not with 1 quarter lens, you need to see slightly longer horizon and see how India energy and consumption or a coal consumption is going to go... the demand for coal is going to go up around 4% to 5%.

Analyst raised significant concerns about market oversupply, which management addressed by emphasizing a long-term view of India's demand growth and the potential for import substitution.

Asked by Pratyush Kamal

Status and strategic rationale for the explosive manufacturer acquisition Direct
Okay. So first is we have not yet acquired the company... What we have done is we have signed an agreement to acquire... The purpose is basically for us to -- for DMSL to produce differentiated value-adding kind of products to help enhance our journey in the mining industry as a solutions provider and also help in terms of our export business.

Clarifies that the acquisition is an agreement, not yet closed, and details its strategic importance for downstream integration, product differentiation, and export capabilities.

Asked by Kushal Shah

Reasons for margin decline in the fertilizer segment Direct
Two reasons, Chirag. Yes, one reason very clearly, this is a sizable cost increases, which has happened on raw material side. And subsidy was not in tune with the increases... Second, if you see the growth in overall revenue, which has come, it has come in primarily from, I'll say, low end of the product.

Explains the specific factors contributing to the margin pressure in the fertilizer segment, including uncompensated raw material cost inflation and an unfavorable product mix due to delayed Rabi sowing.

Asked by Chirag

Long-term targets and growth for the B2C mining chemical business Direct
the way we are looking at B2C is in the we now start to call it as a downstream business of DMSL... it's growing in its own way, driven by the mining -- the growth in mining and infrastructure. And our share is slowly, slowly improving there.

Provides insight into the strategic importance of the B2C segment as a downstream business within DMSL, highlighting its growth trajectory driven by mining and infrastructure.

Asked by Mukta Chandani

2 min read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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