Deepak Nitrite Limited — Q4 FY26 earnings call

Call held 18 May 2026

Management summary

Deepak Nitrite reported strong Q4 FY26 results despite a challenging global chemical environment, driven by robust domestic demand, improved margins, and operational efficiencies. While facing technical issues with its nitric acid plant and increased receivable days, the company is progressing well on key expansion projects and anticipates a stronger margin profile in FY27.

Highlights

  • Consolidated revenues for Q4 FY26 stood at INR 2,127 crore, with PAT growing 120% quarter-on-quarter and 9% year-on-year to INR 220 crore.

  • EBITDA margin significantly improved to 18% during Q4 FY26 compared to 11% in Q3 FY26, reflecting strong sequential growth of 74% over Q3.

  • Advanced Intermediates witnessed healthy growth, with revenues of INR 708 crore (up 8% YoY and QoQ) and EBIT improving to INR 34 crore from INR 15 crore in Q3 FY26.

  • Phenolics segment delivered strong performance, with EBIT margins improving to 20% and EBIT at INR 287 crore in Q4 FY26.

  • Key growth projects like multipurpose agrochemical intermediates, MIBK, MIBC are scheduled for commissioning in Q2 FY27, and the polycarbonate facility execution is on track for June 2028.

Concerns

  • The nitric acid plant operated at approximately 45% utilization in Q4 FY26 due to technical issues, impacting its target EBITDA contribution.

  • The global chemical industry continued to operate in a challenging environment during FY26, with Q4 intensified by geopolitical disruptions, logistics challenges, and crude oil volatility.

  • Receivable days increased due to lower realization and a strategic shift to dealership/CSA models in a volatile market to secure outstanding payments.

Key financials

  1. Consolidated Revenue ₹2,127 Cr -3.4%YoY
  2. Consolidated EBITDA ₹383 Cr +13%YoY
  3. Consolidated EBITDA Margin 18%
  4. Consolidated PBT ₹301 Cr
  5. Consolidated PAT ₹220 Cr +9%YoY
  6. EPS ₹16.11

What they filed

Q1 FY27: revenue up 31.9%, net profit up 116.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue605 552 654 612 616 +2%694 +26%718 +10%807 +32%
EBITDA75 42 78 60 47 −37%45 +7%73 −6%110 +83%
Net profit142 17 54 30 112 −21%8 −53%39 −28%65 +117%
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

Share of Revenue
₹2,137 Cr Total
  • Phenolics (Q4 FY26) ₹1,429 Cr 66.9%
  • Advanced Intermediates (Q4 FY26) ₹708 Cr 33.1%

Capital allocation

high confidence
  • Capex ₹11,000 Cr 60:40 debt:equity for the total INR 11,000 crore projects
    • Multipurpose agrochemical intermediates and MIBK, MIBC projects
    • Polycarbonate facility
    • Nitration and hydrogenation facilities at Dahej
    So, the total project, what we have announced is around INR11,000 crore. The funding is for all the projects together. We have tied up with the banks for debt. It will be in the ratio of 60-40.
  • Dividend ₹7.5/share (final)
    The Board has recommended a final dividend of INR7.5 per equity share for FY26, reaffirming our commitment to delivering consistent shareholder value, continuing to invest in strategic growth and long-term value creation.

Guidance & targets

Profitability

  • Nitric Acid Plant EBITDA Addition Profitability · once stable operations · Medium confidence INR 90-100 crore
    But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold. ... But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.

    — Maulik Mehta

  • Q1 FY27 Performance Profitability · Q1 FY27 · Medium confidence better than Q4
    I can say that our Q1 looks on track for numbers, which are better than Q4, whether it is on standalone or on a consolidated basis. So we anticipate Q1 to be better than Q4, which was, of course, better than Q3.

    — Maulik Mehta

  • Standalone Margin Profile Profitability · FY27 · Medium confidence stronger margin profile
    I'll also share that the new products that we have talked about, whether it is in Chem Tech or in Deepak Nitrite, the new downstream products which are in the ag chem space and outside of the ag chem space also. They are all significantly margin accretive. Therefore, in FY27, we expect a stronger margin profile, even for the standalone business, compared with FY26.

    — Maulik Mehta

Capacity

  • MIBK/MIBC Projects Commissioning Capacity · FY27 · High confidence tail end of Q1 or early part of Q2
    Basically, we're finishing with the mechanical completion of the plant and we will soon be getting into the pre-commissioning cycle as it may be. And at some point, maybe perhaps at the tail end of Q1 or the early part of Q2 is when we will be looking at commissioning of the asset because the asset is commissioned along with a couple of other plant assets as well. So we kind of remain on track with that.

    — Maulik Mehta

  • Polycarbonate Facility Commissioning Capacity · June 2028 · High confidence June 2028
    So we've clarified earlier, and we are, by and large, remaining kind of in line with that, and we are expecting it to be commissioned by June 2028.

    — Maulik Mehta

New Products

  • Commercial Production of Fluorinated Molecule & New Products New Products · from Q3 onwards (FY27) · High confidence regularized basis
    So in all of these, as we said earlier, we anticipate commercial production on a regularized basis from Q3 onwards because this will reach our export customers towards the end of Q3 in time for their CY 2026 requirements. So we remain broadly on track.

    — Maulik Mehta

Overall Outlook

  • Return to Normalcy Overall Outlook · FY27 · Low confidence improving trend
    We are also working towards a return to what we consider normalcy a couple of years ago. So FY27 will be this period where you will see an improving trend.

    — Maulik Mehta

What to watch in Q1 FY27

Nitric Acid Plant Stabilization

next quarter (Q1 FY27)
Current ~45% utilization due to technical issues in Q4 FY26
Target Stable operations, achieving INR 90-100 crore EBITDA addition

Why it matters

Stabilization of this plant is crucial for realizing its full EBITDA potential and reducing reliance on external procurement.

But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.

Risks & concerns

  • Geopolitical Disruptions and Supply Chain Volatility

    high

    Middle East war, Strait of Hormuz blocking, and related logistics/freight challenges led to volatility in crude oil and feedstock prices in Q4 FY26.

    Management acknowledged

  • Raw Material Price Volatility

    medium

    Volatility in prices of crude oil and related feedstocks (e.g., ortho-xylene, toluene, sulfur) continues to influence industry conditions.

    Management acknowledged

  • Technical Issues with Nitric Acid Plant

    medium

    The nitric acid plant operated at ~45% utilization in Q4 FY26 due to technical issues, impacting its expected EBITDA contribution.

    Management acknowledged

  • China Supply Dynamics and US Tariff Policies

    medium

    Near-term industry conditions are expected to remain influenced by China supply dynamics and U.S. tariff policies.

    Management acknowledged

Q&A highlights

7 direct
Nitric Acid Plant Utilization and EBITDA Target Direct
But during this quarter under review, we were roughly at about 45% of utilization. And hence, for the balance, we had to secure nitric acid from the market in order to ensure that our products continue to be manufactured and sold.

Reveals specific operational challenges and underutilization of a new plant, impacting its expected financial contribution.

Asked by Sanjesh Jain

Phenolics Raw Material Availability and Q1 Outlook Direct
So first of all, I'll just highlight that in Q1, in the first part of April, when there was a concern about feedstock availability, we also preponed the annual maintenance. So both of those were kind of addressed within that same period of time, I think it was about 10, 11 days.

Provides insight into proactive measures taken to manage raw material supply and maintain profitability in the Phenolics segment amidst volatility.

Asked by Sanjesh Jain

MIBK/MIBC Commissioning Timeline Direct
And at some point, maybe perhaps at the tail end of Q1 or the early part of Q2 is when we will be looking at commissioning of the asset because the asset is commissioned along with a couple of other plant assets as well. So we kind of remain on track with that.

Clarifies the specific timeline for the commissioning of new value-added projects, crucial for future growth.

Asked by Sanjesh Jain

New Products Commercialization and Raw Material Sourcing Strategy Direct
So in all of these, as we said earlier, we anticipate commercial production on a regularized basis from Q3 onwards because this will reach our export customers towards the end of Q3 in time for their CY 2026 requirements. So we remain broadly on track.

Details the progress and timeline for new product launches and the strategic approach to raw material procurement in a volatile environment.

Asked by Nirav Jimudia

China Nitration Plant Overhauls and Tailwinds Direct
This is a general CCP guideline with regards to the chemistries as well as the safe material movement as well as the transport, which includes, of course, also product at port and transport over oceans. So it is an all-encompassing audit, and it is an all-encompassing compulsion, which is not also limited to only things like DCS.

Highlights a significant structural tailwind for Deepak Nitrite due to regulatory changes in China affecting nitration products, where Deepak has a strong market position.

Asked by Archit Joshi

Polycarbonate Project Commissioning and Funding Direct
So, the total project, what we have announced is around INR11,000 crore. The funding is for all the projects together. We have tied up with the banks for debt. It will be in the ratio of 60-40.

Provides clarity on the scale, timeline, and funding strategy for a major strategic project, reassuring investors about financial capacity.

Asked by Vidhi Shah

Receivable Days and Advanced Intermediates Margin Profile Direct
So what you are seeing as underutilized is actually the realization which has gone down, not that the capacity had gone down. Capacity, we are running full, but it was the realization which was lower as compared to earlier years. With regards to the outstanding number of days, in some cases, we have changed the model, because today we are passing through a very volatile situation, and we do not want to risk our outstanding. So, instead we have gone into a dealership and CSA model.

Explains the increase in receivable days and the strategic shift in sales model to mitigate risk in a volatile market, while also highlighting the margin-accretive nature of new products.

Asked by Tushar Raghatate

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Detailed narrative

Q4 FY26 Performance Amidst Global Challenges

Deepak Nitrite delivered strong operational and financial results in Q4 FY26, with consolidated revenues reaching INR 2,127 crore and PAT growing 120% QoQ to INR 220 crore. This performance was achieved despite a challenging global chemical industry environment, intensified by geopolitical disruptions in the Middle East, which caused volatility in crude oil prices and logistics. The company's agility and strong operational capabilities allowed it to capitalize on emerging opportunities.

Significant Margin Expansion

The company witnessed a substantial improvement in profitability, with consolidated EBITDA margins expanding to 18% in Q4 FY26, up from 11% in Q3 FY26. This was supported by stable volumes, favorable pricing, enhanced plant fungibility, and continuous plant process refinement. The Phenolics segment, in particular, achieved EBIT margins of 20% in Q4 FY26, driven by improving spreads and disciplined procurement.

Progress on Strategic Growth Projects

Deepak Nitrite is making steady progress on its long-term growth initiatives. The nitration and hydrogenation facilities at Dahej, commissioned in FY26, are now stabilized and ramped up. Multipurpose agrochemical intermediates, MIBK, and MIBC projects are on track for commissioning in Q2 FY27. The execution of India's first fully integrated polycarbonate facility is also on track for commissioning by June 2028, supported by a strategic agreement with Praxair India for an on-site HyCO plant.

Nitric Acid Plant Operational Challenges

The nitric acid plant faced technical issues in Q4 FY26, leading to approximately 45% utilization. This necessitated securing nitric acid from the market to ensure continuous product manufacturing. Management is working with technology and equipment suppliers to resolve these issues and anticipates achieving the target EBITDA contribution of INR 90-100 crore once the plant operates stably.

Proactive Raw Material Sourcing and Market Strategy

In anticipation of market volatility, Deepak Nitrite strategically secured critical raw materials at favorable prices during Q4 FY26, resulting in a larger inventory than usual. The company also adjusted its sales model to dealership and CSA to manage outstanding receivables in a volatile market. For Q1 FY27, management expects performance to be better than Q4 FY26, both on a standalone and consolidated basis.

Impact of China's Chemical Industry Regulations

Management highlighted that China's upcoming constraints on certain key chemistries, including production, storage, and transportation, are expected to create an uptick in demand and profitability for nitration products. This structural tailwind benefits responsible chemical manufacturers like Deepak Nitrite, which has a significant global market share in the nitration chain, as unsafe operations in China's nitration industry have been a recurring issue.

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