Deepak Fertilizers and Petrochemicals Corporation Limited — Q4 FY26 earnings call

Call held 29 May 2026

Management summary

Deepak Fertilisers reported a 12% revenue growth for FY26, reaching INR11,506 crores, despite a challenging Q4 marked by input cost inflation, pricing pressures, and a one-off INR75 crore impact from an ammonia plant shutdown. The company is progressing on strategic initiatives, including the commissioning of key projects in Q2 FY27 and the successful receipt of its first LNG cargo, enhancing raw material security. While margins were subdued in H2 FY26, management anticipates improvement driven by a stronger business mix and cost advantages from the new LNG contract.

Highlights

  • Revenue growth of 12% for the full year to INR11,506 crores.

  • Q4 Mining Chemicals volume up 12% Y-o-Y and 27% sequentially, with full year growth of 11%.

  • B2C segment in Mining Chemicals now contributes 16% of revenue, improving realization and customer engagement.

  • Specialty and Croptek products now contribute 33% of Crop Nutrition segment revenue, up from 30% previous year.

  • Maiden cargo from 15-year LNG contract received, improving supply security and cost visibility for ammonia value chain.

Concerns

  • Q4 EBITDA at INR354 crores, full year EBITDA at INR1,684 crores, impacted by challenging environment.

  • Q4 results include a one-off impact of around INR75 crores due to a planned ammonia shutdown.

  • Second half of FY26 was subdued due to sharp increase in input costs (phos acid, sulfur) and lag in subsidy realignment.

  • Pricing pressure in Chemicals segment, especially IPA, impacted margins.

  • Net debt to EBITDA stood at 2.86x.

  • Project commissioning for Gopalpur TAN and Dahej nitric acid delayed to Q2 FY27 due to skilled manpower shortage.

Key financials

2 periods

Q4 FY26

  • Revenue
    ₹3,011 Cr
  • EBITDA
    ₹354 Cr

FY26

  • Revenue
    ₹11,506 Cr
    YoY +12%
  • EBITDA
    ₹1,684 Cr
  • PAT
    ₹739 Cr
    YoY -18%
  • Net Debt
    ₹4,824 Cr
  • Net Debt to EBITDA
    2.86×

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
    12% Volume Growth (Q4 FY26)0.27 sequential_growth Volume Growth (Q4 FY26)11% Full Year Growth16% B2C Revenue Contribution
  • Crop Nutrition
    33% Specialty & Croptek Revenue Contribution

Capital allocation

high confidence
  • Capex ₹1,569 Cr
    • Gopalpur TAN project completion
    • Dahej nitric acid project completion
    On the balance sheet, capex during the year around INR1,569 crores as we move closer to the completion of our key growth projects.
  • Debt Net ₹4,824 Cr · 2.9× EBITDA
    As a result, the net debt stood at INR4,824 crores and net debt to EBITDA is around 2.86x.
  • M&A DMSL Acquisition · Completed

    Strengthened mining chemical platforms and enhanced ability to deliver integrated value-added solutions.

    In addition, we have completed the acquisition at DMSL, which strengthened our mining chemical platforms and enhance our ability to deliver integrated value-added solutions to customers.
  • M&A Explosive unit (Chardham Chemicals) Acquisition · Completed · Consideration ₹[object Object] (cash)

    Consistent with transformation strategy of DMSL to provide holistic mining solutions, full range of products, market proximity, and speed to market.

    So my first question was on the Chardham Chemicals that we have acquired. So like we have paid around INR120-odd crores for 100% stake.

Guidance & targets

Capacity

  • TAN capacity utilization (Gopalpur) Capacity · by end of year (FY27) · High confidence 90-95%
    We expect by end of this year, we should be at least touching 90% to 95% utilization on a TPD basis.

    — Subhash Anand

Project Commissioning

  • Gopalpur TAN & Dahej Nitric Acid Commissioning Project Commissioning · Q2 FY27 · High confidence Commissioning expected
    Commissioning is expected in Q2 FY '27, and both projects remain within the approved capex envelope.

    — Subhash Anand

Investment Recovery

  • Ammonia plant investment recovery Investment Recovery · this year (FY27) · Medium confidence >30-40%
    So based on current spreads, we can recover more than 30%, 40% of our ammonia investment in this year itself.

    — Subhash Anand

Business Mix

  • Contribution from Specialty products and B2C segment Business Mix · coming quarters · Medium confidence Higher contribution
    And a stronger business mix with higher contribution from Specialty products and B2C segment.

    — Subhash Anand

Overall Performance

  • Progressively stronger performance Overall Performance · coming period · Medium confidence Stronger performance
    So overall, with these levers coming into play, we are confident of progressively stronger performance in the coming period.

    — Subhash Anand

Margin

  • Chemical margins Margin · next quarter · Medium confidence Improvement
    But if you're looking holistically, the margin improvement is certain and that will get reflected in our consolidated chemical portfolio. ... You'll be able to see once we come up with next quarter results, partial reflection will be visible there.

    — Subhash Anand

Capex

  • FY27 Capex Capex · FY27 · High confidence INR800-1,000 crores
    So there is almost INR800 crores to INR1,000 crores capex spending, including maintenance.

    — Subhash Anand

What to watch in Q1 FY27

Gopalpur TAN & Dahej Nitric Acid Commissioning

Q2 FY27
Current 95% and 86% complete respectively
Target Commercial operations

Why it matters

These are key growth projects expected to enhance capacity, cost competitiveness, and operating leverage.

Commissioning is expected in Q2 FY '27, and both projects remain within the approved capex envelope.

Risks & concerns

  • Challenging Operating Environment

    high

    Impact from LPG shortage, LNG cuts, volatile fertiliser prices, inadequate subsidy, China export ban, India ammonium nitrate export ban.

    Management acknowledged

  • Input Cost Inflation & Pricing Pressure

    high

    Sharp increase in phos acid and sulfur costs, along with pricing pressure in IPA, impacted H2 FY26 margins.

    Management acknowledged

  • El Nino Impact on Rains

    medium

    Potential impact on agricultural output and demand, though tracking suggests lesser impact in crop geographies.

    Management acknowledged

  • Skilled Manpower Shortage

    medium

    Severe shortage of skilled contract manpower caused project realignment but has since bounced back.

    Management acknowledged

  • Subsidy Realignment Lag

    medium

    Delay in subsidy adjustments affected margins in the Crop Nutrition segment.

    Management acknowledged

  • High Receivables & Inventory

    medium

    Elevated channel inventory and receivables in Crop Nutrition due to soft market and uneven rains, expected to normalize.

    Analyst acknowledged

  • Coal India's TAN Plant

    low

    Potential competition from Coal India's own TAN plant, but DFPCL highlights challenges with Indian coal for syngas production.

    Analyst downplayed

Q&A highlights

7 direct
TAN volume run rate Direct
The reason for a slightly better performance in Q4 on volume terms compared to Q3 is demand strengthening. And as you know, as we get to the last quarter of the financial year in India, all the mining companies, particularly have their targets of mineral production and rock production to achieve.

Clarifies the drivers behind the strong Q4 TAN volumes and provides context on seasonal demand.

Asked by Rohit Sinha

Equinor natural gas supply security Direct
Now we are fully secured. When I say fully secured, the way we have contract we have a minimum take-or-pay contract currently with our existing local supplier. On top of that, we have got now 15-year long supply. So we don't see actually any shortage of gas at this point of time.

Confirms long-term supply security for natural gas, a critical raw material, mitigating previous concerns.

Asked by Rohit Sinha

Acetone/IPA prices outlook Direct
Okay. Now if you're asking current IPA prices, it's already very, very high. And reason for that is the polypropylene is not available or the government restriction because of LPG shortage. So the prices have moved up. ... Yes, price will remain elevated for some time before the situation becomes normal and then we'll have to see what will be the normal IPA prices once things go back.

Provides insight into the drivers of high IPA prices and the expectation for continued elevation due to supply constraints.

Asked by Shubham Dhasmana

Chardham Chemicals acquisition strategy Direct
So this acquisition, as our Chairman mentioned in his opening speech also, is consistent with and a very big enabler to the transformation strategy of DMSL, which is the mining solutions, mining services entity of the group in the sense that the business model that we are evolving in DMSL is that of being able to provide the productivity improvements in the mines and the quarries and the infrastructure projects.

Explains the strategic rationale behind the acquisition, linking it to the broader shift towards holistic mining solutions.

Asked by Kushal Shah

Chemical margins post-Equinor contract Partial
Okay. If you're looking at total, I'll say, segment as a Chemicals, then yes, the margin improvement will happen because Equinor contracts do give us a benefit in terms of overall input cost. ... You'll be able to see once we come up with next quarter results, partial reflection will be visible there.

Management confirms margin improvement from the Equinor contract but defers quantification, making it a key item to watch next quarter.

Asked by Sheelkumar Shah

Cash flow, receivables, and inventory Direct
This is basically, as Chairman also spoke, fertiliser business has gone soft. The rabi season was not I'd say, towards the end of rabi, we have seen uneven rain and then farmers getting impacted. Currently, the inventory is slightly higher in the trade. Channel inventory is slightly higher. So that's what is leading to higher inventory as well as receivables in our fertiliser business.

Addresses the increase in working capital, attributing it to market conditions in the fertilizer business and expecting normalization.

Asked by Sheelkumar Shah

Ammonia supply for Gopalpur Direct
I'll say there's no disconnect in terms of we saying ammonia has been tied up. We have a contract in place or we know from where the source is in place. Since we have we are already in importing and selling ammonia for us, some more additional quantity need to buy and supply into that plant. So that's not a challenge for us.

Reassures on the critical raw material supply for the upcoming Gopalpur TAN plant, addressing potential investor concerns.

Asked by Parth Kotak

Further project delays Direct
Currently, if you ask, are we expecting any further delay? No, definitely no. Even this quarter delay, which got delayed from Q4 to now or from Q1 to Q2 was not led by any major factor. It was more led by nonavailability of skilled workforce because of various factors which came and got impacted or got affected.

Management provides a firm stance against further delays for key projects, clarifying the reasons for past delays.

Asked by Adarsh Jain

3 min read 7 chapters

Detailed narrative

Q4 FY26 Performance and Full Year Overview

Deepak Fertilisers reported a full-year revenue of INR11,506 crores, marking a 12% growth, with Q4 revenue at INR3,011 crores. Full-year EBITDA stood at INR1,684 crores, while Q4 EBITDA was INR354 crores. The second half of FY26 was notably subdued due to a sharp increase in input costs, pricing pressures in the Chemicals segment, and a lag in subsidy realignment, further impacted by a one-off INR75 crore effect from a planned ammonia plant shutdown in Q4.

Strategic Shift Towards Value-Added Products

The company is actively pursuing a strategy to enhance its business mix by increasing the contribution from specialty products and B2C segments. In Mining Chemicals, the B2C segment now accounts for 16% of revenue, up from 13% in the previous year. Similarly, in Crop Nutrition, Specialty and Croptek products now contribute 33% of segment revenue, an increase from 30% in the prior year, indicating a positive structural shift for margin improvement.

Key Project Execution and Capacity Expansion

Two major growth projects, Gopalpur TAN and Dahej nitric acid, are nearing completion, with 95% and 86% progress respectively. The cumulative CWIP for these projects is INR3,050 crores, and total cumulative spend stands at INR3,800 crores. Commissioning for both projects is now anticipated in Q2 FY27, a slight delay from previous estimates primarily due to a shortage of skilled manpower, but the projects remain within their approved capex envelopes.

Raw Material Security and Cost Competitiveness

A significant development was the receipt of the maiden cargo from the 15-year LNG contract with Equinor in May. This long-term contract is expected to provide enhanced supply security, improved cost visibility, and integration advantages for the ammonia value chain, which will support margin stability across downstream businesses. Management anticipates a clear cost benefit from this arrangement, especially given current gas price dynamics.

Strategic Acquisition for Mining Solutions

The company completed the acquisition of an explosive unit (Chardham Chemicals) for INR120 crores, acquiring a 100% stake. This acquisition is strategic, aimed at transforming the company's offering from products to holistic mining solutions. It leverages the acquired licenses, land, and market proximity to provide a full range of products and services that improve productivity and reduce costs for customers in the mining and infrastructure sectors.

Working Capital and Debt Position

The company's net debt stood at INR4,824 crores, resulting in a net debt to EBITDA ratio of 2.86x, reflecting the advanced stage of its investment cycle. Receivables and inventory days increased significantly during the year, primarily in the Crop Nutrition business. This was attributed to a soft fertilizer market, uneven rains, and elevated channel inventory, but management expects this working capital buildup to normalize within the next month or two as the Kharif season progresses.

Navigating Market Challenges

The company faced a challenging operating environment in Q4, including sudden LPG and LNG supply disruptions, volatile fertiliser prices, and an inadequate subsidy mechanism. IPA performance was particularly affected by weak prices and limited RGP availability. Despite these headwinds, management believes they have navigated the situation effectively and are observing positive trends in Q1 FY27, with some respite from the Petroleum Ministry regarding LPG propylene sourcing.

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