Deepak Fertilizers and Petrochemicals Corporation Limited — Q4 FY25 earnings call

Call held 23 May 2025

Management summary

Deepak Fertilisers reported a strong Q4 and full-year FY25, driven by robust operational performance and strategic shifts towards specialty products. Revenue and net profit saw significant Y-o-Y growth, with full-year net profit doubling. The company also strengthened its balance sheet through debt reduction and improved leverage ratios, while progressing on key capacity expansion projects.

Highlights

  • Q4 operating revenue stood at ₹2,667 crores, a strong 28% increase Y-o-Y.

  • Full-year FY25 revenue reached ₹10,274 crores, an 18% growth Y-o-Y, crossing the ₹10,000 crore milestone.

  • Q4 EBITDA was ₹480 crores (up 10% Y-o-Y) with an 18% margin, while full-year EBITDA grew 50% to ₹1,925 crores with a 19% margin.

  • Q4 net profit increased 21% Y-o-Y to ₹278 crores, and full-year net profit doubled (102% Y-o-Y) to ₹945 crores, achieving a 9% margin.

  • Specialty product portfolio now contributes 22% of total revenue, driven by crop-specific innovations and premium LDAN.

  • Net debt reduced by ₹120 crores, improving the net debt-to-EBITDA ratio significantly from 2.66x to 1.72x.

  • The Board recommended a 100% dividend for FY25.

  • Gopalpur TAN project is 75% complete, and Dahej nitric acid project is 48% complete, both expected to commission in H2 FY26.

Key financials

2 periods

Q4

  • Operating Revenue
    ₹2,667 Cr
    YoY +28%
  • EBITDA
    ₹480 Cr
    YoY +10%
  • EBITDA Margin
    18%
  • Net Profit
    ₹278 Cr
    YoY +21%

FY25

  • Operating Revenue
    ₹10,274 Cr
    YoY +18%
  • EBITDA
    ₹1,925 Cr
    YoY +50%
  • EBITDA Margin
    19%
  • Net Profit
    ₹945 Cr
    YoY +102%
  • Net Profit Margin
    9%

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

  • Crop Nutrition Business (CNB)
    86% Q4 Growth68% Q4 Bulk Fertilizers Volume Growth210 Kt Q4 Bulk Fertilizers Volume1,000 Kt FY25 Bulk Fertilizers Volume111% Q4 Croptek Volume Growth13% Q4 Specialty Fertilizers Volume Growth
  • Mining Chemical (TAN)
    0.13 sequential_growth Q4 Volume Growth146 Kt Q4 Volume-3% Q4 Volume Growth3% FY25 Volume Growth0.13 sequential_growth LDAN Sequential Growth11% LDAN Y-o-Y Growth18% LDAN B2C Revenue Share
  • Industrial Chemicals
    29% Q4 Nitric Acid Volume Growth3% FY25 Nitric Acid Volume Growth-5% IPA Volume Decline (FY25)

Capital allocation

high confidence
  • Capex ₹4,500 Cr
    • Capacity enhancement for nitric acid at Dahej and technical ammonium nitrate at Gopalpur
    In fact, the total CAPEX this year, which we talked about FY ‘26, the 2 new projects, total CAPEX is expected to be around INR 4,500 crores, total I am talking. Out of that, our capitalization is around INR 1,400 crores. That's what we already completed. So, balance is expected in the current year.
  • Debt Net ₹3,305 Cr · 1.7× EBITDA
    • Repayment Net debt reduced by around INR 120 crores ₹120 Cr
    • New borrowing DMSL raised INR 800 crores via CCDs for strengthening balance sheet and capital expansion (Gopalpur) ₹800 Cr
    And now the net-to-EBITDA ratio has improved to a healthy 1.72x versus 2.66x, which was in the previous year.
  • Liquidity Liquidity disclosed Generated INR 1,400 crores free operating cash flow. Working capital as a percentage of revenue declined from 17% to 12%.
    Coming to balance sheet and cash flow. As Mr. Mehta pointed out, we have generated INR 1,400 crores free operating cash flow supported by robust EBITDA and improved working capital efficiency. Working capital as a percentage of revenue declined from 17% to 12%.

Guidance & targets

Capex

  • Total CAPEX for new projects Capex · FY26 · High confidence ₹4,500 crores
    In fact, the total CAPEX this year, which we talked about FY ‘26, the 2 new projects, total CAPEX is expected to be around INR 4,500 crores, total I am talking.

    — Subhash Anand

  • Balance CAPEX expected in current year Capex · FY26 · High confidence ₹3,100 crores
    Out of that, our capitalization is around INR 1,400 crores. That's what we already completed. So, balance is expected in the current year. So, INR 3,100 crores in FY '26, all of it? Because we have to complete the project. So, this is the CAPEX of this year expected.

    — Subhash Anand

  • Maintenance CAPEX Capex · Annual · High confidence ₹300-400 crores
    That's roughly around, I would say INR 300 crores to INR 400 crores. That's the normal maintenance CAPEX, which will continue as a normal business.

    — Subhash Anand

ROCE

  • ROCE for new projects (Gopalpur/Dahej) ROCE · High confidence 18-20%
    In fact, both the new projects, what we have embarked on, we are looking at a healthy ROCE somewhere in the range of, I will say, 18% to 20%, and we will prefer to maintain that level for these 2 projects.

    — Subhash Anand

Utilization

  • Utilization for new projects (first year) Utilization · First year of operations · High confidence 70%
    First year, we expect 70%, which is the normal ramp up. The moment we go to an 80%, 85%, we start seeing this kind of ROCE.

    — Subhash Anand

TAN Demand Growth

  • TAN demand growth TAN Demand Growth · Y-o-Y · High confidence 6-7%
    And second thing, this industry, the TAN demand itself is growing 6% to 7% Y-o-Y.

    — Subhash Anand

Project Commissioning

  • Gopalpur and Dahej projects commissioning Project Commissioning · H2 FY26 · High confidence H2 FY26
    We stand committed, the commissioning of both the plant is expected in H2 FY '26.

    — Subhash Anand

Debt

  • Peak debt level Debt · When projects are complete · High confidence ₹5,000 crores
    So the debt level currently, we are at around INR 3,300 crores. So, we expect to be around INR 5,000 crores when the peak touches.

    — Subhash Anand

Mining Chemical Business

  • Mining Chemical volume growth Mining Chemical Business · Current year · Medium confidence Single digit
    Definitely, we do have capacity constraint, and some debottlenecking will help us to grow volume. We expect volume will grow in current year, although it will be single digit.

    — Subhash Anand

  • Mining Chemical margin expansion Mining Chemical Business · Current year · Medium confidence Play a larger role
    But we do expect margin expansions will play a larger role than just volume growth.

    — Subhash Anand

  • Overall result Mining Chemical Business · FY26 · High confidence Better result compared to FY25
    Yes. We do expect '26, definitely, we will do an improvement. And you will see definitely a better result compared to FY '25, what we have.

    — Subhash Anand

Ammonia

  • EBITDA breakeven price Ammonia · High confidence $310-$320
    We always maintain for EBITDA breakeven, our number is around $310 to $320. So, we broadly remain at that level for EBITDA breakeven.

    — Subhash Anand

LNG Contract

  • Benefits from long-term Equinor contract LNG Contract · Next year (FY26) · High confidence Kicking in
    Currently, our gas prices are more I will say since our long-term Equinor contract yet to get kicked in and that will get kicked in only next year, FY '26, and that's where we will start seeing the real benefit of gas price reduction happening.

    — Subhash Anand

What to watch in Q1 FY26

Gopalpur and Dahej project commissioning

H2 FY26
Current Gopalpur 75% complete, Dahej 48% complete
Target Commissioning in H2 FY26

Why it matters

Timely commissioning of these projects is crucial for new capacity addition, revenue growth, and achieving target ROCE.

We stand committed, the commissioning of both the plant is expected in H2 FY '26.

Risks & concerns

  • IPA margin pressures due to oversupply and weak acetone prices

    medium

    IPA faces near-term margin pressures due to oversupply and weak acetone prices, impacting Industrial Chemicals segment profitability.

    Management acknowledged

  • Global volatility and tariff dimensions

    medium

    Global volatility and emerging tariff dimensions pose a risk, but the company's alignment with the India growth story and shift to specialty products provide insulation.

    Management acknowledged

  • Competition in TAN from new players

    low

    Analyst raised concerns about new TAN capacity from competitors (Chambal, GNFC), but management believes there is sufficient demand headroom and unique USPs.

    Analyst downplayed

Q&A highlights

5 direct
Valuation discrepancy between Mining Chemical business and total company Partial
And the perplexment has been that how is it that the sum of the parts, meaning the totality of the 3 businesses which are doing so well, somewhere is not getting valued as much as one part is getting valued, which is where I seek a better understanding with your help to be able to somewhere get across to the various investor community in terms of the real strength that we bring in...

Analyst challenged management on the perceived undervaluation of the overall company compared to a single segment's valuation, prompting management to acknowledge the need for more detailed segmental insights.

Asked by Bharat Shah

Segment-wise EBITDA margins Partial
So, we don't give segment-wise EBITDA margin, this thing. But overall EBITDA, if you see, yes, at consol level, we have delivered 19% EBITDA. All 3 business has a different level of EBITDA. That's definitely we all understand and each one of you aware of. In terms of Mining business, that's a highly profitable business. Fertilizers business, as such, the industry compared to all 3 businesses comes at a lower level, Industrial Chemicals at the mid-level.

Analyst sought specific segment-wise profitability, which management declined to provide numerically but gave a qualitative ranking, indicating varying margin profiles across businesses.

Asked by Jainam Ghelani

Peak debt levels with CAPEX Direct
So the debt level currently, we are at around INR 3,300 crores. So, we expect to be around INR 5,000 crores when the peak touches. Yes, that's the right assumption because the 2 new facilities, which are coming up, will start contributing sizably to our bottom line as well as to cash flow. So the deleveraging will start after that.

Analyst probed the future debt trajectory given ongoing CAPEX, and management provided a clear peak debt estimate and timeline for deleveraging linked to project commissioning.

Asked by Jainam Ghelani

Reasons for increased other expenses and lower Chemical business earnings Direct
In fact, since the majority of the growth has come from CNB business, and that has a very high freight output, so that's the impact what you see in our other expenses. ... Last quarter, specifically, the dip in industrial chemical or dip in Chemical business segment is IPA is one thing, which has impacted, because there is a pressure of IPA prices globally, and that has impacted marginal Industrial Chemical business.

Analyst sought clarification on cost and segment performance trends, and management attributed them to specific operational factors like freight costs for CNB and IPA market pressures.

Asked by R. Sankaranarayanan

TAN volume growth constraints Direct
No, Nikhil, you are right. There's no demand constraint actually. We do have a demand, and we are at this point of time constrained by supply side. We have a nitric acid capacity constraint, and that's a limiting factor for us to grow our TAN substantially. And that's one of the main reasons for us to get into capacity and expansions and then cater to the demand, which we already know we have in front of us.

Analyst questioned the suboptimal TAN volume growth, and management clarified it was due to supply-side constraints (nitric acid capacity) rather than demand, highlighting the strategic importance of current capacity expansions.

Asked by Nikhil Gada

Ammonia EBITDA breakeven cost and gas price impact Direct
No. In fact, $380 I don't think so we ever talked $380 in dollars. We always maintain for EBITDA breakeven, our number is around $310 to $320. So, we broadly remain at that level for EBITDA breakeven. ... Currently, our gas prices are more I will say since our long-term Equinor contract yet to get kicked in and that will get kicked in only next year, FY '26, and that's where we will start seeing the real benefit of gas price reduction happening.

Analyst sought clarity on ammonia breakeven costs and the impact of falling natural gas prices, leading management to reaffirm the breakeven range and explain the lag in realizing benefits from new gas contracts.

Asked by Pratyush Kamal

Nitric Acid business margins and Chinese dumping Direct
Okay. Nitric acid, when you are talking, yes, nitroaromatics do have challenges, because of imports coming in and that's seeing a competition. But other side of things, the TAN business across the country is seeing a good demand and nitric acid is one of the important component or a raw material input for that business. So, nitric acid as a total business, we have not seen a challenge placing our nitric acid.

Analyst inquired about potential Chinese dumping impact on nitric acid margins, and management acknowledged competition in nitroaromatics but affirmed strong demand for nitric acid as a TAN input, indicating overall business resilience.

Asked by Pratyush Kamal

2 min read 6 chapters

Detailed narrative

Strategic Shift Towards Specialty Products

Deepak Fertilisers is actively transitioning from commodity to specialty products, with 22% of total revenues now emerging from this segment. This shift is particularly evident in the Crop Nutrition business, where products like Croptek and Bensulf offer unique value propositions. This strategy is enhancing customer stickiness and contributing to improved margins, aligning with India's growth story and providing insulation from global volatility.

Robust Financial Performance in FY25

The company delivered strong financial results in FY25, with full-year operating revenue growing 18% to ₹10,274 crores. EBITDA saw a remarkable 50% increase to ₹1,925 crores, expanding margins to 19%. Net profit more than doubled, growing 102% to ₹945 crores, reflecting effective strategy execution and cost discipline. The Board recommended a 100% dividend, balancing strong performance with ongoing CAPEX plans.

Capital Expenditure and Balance Sheet Strengthening

Deepak Fertilisers is undertaking significant CAPEX, with ₹1,100 crores spent in FY25 and an estimated ₹4,500 crores planned for FY26, primarily for new nitric acid and technical ammonium nitrate capacities. Despite this, net debt reduced by ₹120 crores, and the net debt-to-EBITDA ratio improved to a healthy 1.72x from 2.66x. The company expects peak debt around ₹5,000 crores, with deleveraging commencing post-project commissioning in FY27.

Segmental Performance Overview

The Crop Nutrition Business (CNB) had its strongest Q4, with bulk fertilizers volume growing 68% Y-o-Y and specialty Croptek volume more than doubling. The Mining Chemical (TAN) business saw Q4 volume grow 13% sequentially, with LDAN's B2C revenue share reaching 18%. Industrial Chemicals experienced a 29% Y-o-Y increase in Q4 nitric acid volumes, though IPA volumes declined due to a plant shutdown for process enhancement.

Progress on Key Expansion Projects

The Gopalpur project for Technical Ammonium Nitrate is 75% complete, and the Dahej project for nitric acid is 48% complete. Both projects are on track for commissioning in H2 FY26. These expansions are crucial for import substitution, margin expansion, and deeper market integration, with an expected ROCE of 18-20% once 80-85% utilization is achieved.

Ammonia Cost Structure and LNG Contract

Management clarified that the EBITDA breakeven for ammonia production is around $310-$320 per ton. While gas prices have fluctuated, the full benefits of the long-term Equinor LNG contract are expected to kick in during FY26, which will significantly reduce gas costs and improve profitability. The company's integrated value chain from LNG to downstream products provides a unique competitive advantage.

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