G N F C — Q4 FY25 earnings call

Call held 26 May 2025

Management summary

GNFC reported a strong Q4 FY25, with PBT of INR 287 crores, contributing to a full-year PBT of INR 790 crores. The company recommended a higher dividend of 180% and saw significant volume growth in its chemical products. However, the elongated shutdown of TDI-II and the impact of NBS subsidy revisions posed challenges, while the methanol plant ceased operations due to unfavorable gas prices.

Highlights

  • Board recommended a higher dividend of 180% (INR 18 per share) for FY25, up from 165% (INR 16.5 per share) last year.

  • Q4 FY25 PBT was strong at INR 287 crores, driven by robust performance in the chemical segment.

  • Chemical segment showed higher volumes and improved profitability, with AN melt, technical grade urea, and aniline contributing positively.

  • Fertilizer segment losses reduced by INR 64 crores despite lower volumes.

  • Significant volume growth across various products in FY25, including Methanol (+73%), TG Urea (+52%), Aniline (+15%), and AN Melt (+9%).

Concerns

  • Elongated shutdown of TDI-II impacted topline by roughly INR 300 crores and profits by INR 100 crores for FY25.

  • NBS subsidy revision effective April 1, 2025, will impact GNFC by approximately INR 2,560 per metric ton.

  • Methanol plant stopped operations from December due to uncompetitive gas prices, impacting production.

  • Net loss of roughly INR 100 crores in other comprehensive income due to a decline in listed investment prices.

Key financials

5 periods

Headline

  • Topline Impact from TDI-II Shutdown
    ₹300 Cr
  • Profit Impact from TDI-II Shutdown
    ₹100 Cr
  • Fertilizer Losses Reduction
    ₹64 Cr
  • NBS Subsidy Impact
    ₹2,560

Q4 FY25

  • PBT
    ₹287 Cr

FY24

  • Dividend
    ₹16.5

FY25

  • PBT
    ₹790 Cr
  • Dividend
    ₹18
  • Net Worth Increase
    ₹250 Cr

FY25, adjusted for OCI

  • PAT
    ₹585 Cr

What they filed

Q1 FY27: revenue up 39.8%, net profit up 275.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,917 1,899 2,055 1,601 1,968 +3%1,996 +5%2,208 +7%2,238 +40%
EBITDA90 132 240 31 185 +106%181 +37%482 +101%393 +1168%
Net profit105 163 211 83 179 +70%150 −8%396 +88%312 +276%
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.

Capital allocation

high confidence
  • Capex ₹2,900 Cr
    • Overall Capex Plans (at different stages of execution/approval) ₹2,900 Cr
    • Kearney recommended expansion investment ₹15,000 Cr
    • CCPP (boiler + power plant) ₹613 Cr
    • FY26 Capex (part of INR 2,200 crores plan) ₹300 Cr
    • Weak Nitric Acid project (part of INR 2,200 crores plan) ₹1,420 Cr
    • Ammonia make-up gas loop (part of INR 2,200 crores plan) ₹225 Cr
    • Annual maintenance capex (when shutdown is there) ₹200 Cr
    • Effluent treatment plant ₹130 Cr
    total capex of around INR2,900 crores is at different stages of execution as well as approval.
  • Dividend ₹18/share (final)
    Board of Directors has recommended a dividend of 180%, which is INR18 per share
  • Liquidity Liquidity disclosed Liquidation of government securities during the year; profit and operating cash flow are more or less touching each other, meaning no incremental working capital was called for.
    there is a liquidation of government securities during the year and which adds up to the cash flow. If you see the cash flow part of it, the profit and operating cash flow are more or less touching each other, which means there is no incremental working capital, which is called for during the year.

Guidance & targets

Capacity

  • CCPP Plant Completion Capacity · September 2025 · High confidence September this year
    And present status of that CCPP plant, which is a boiler plus power plant, we are expecting to be completed by maybe September this year.

    — Jagdish Thakkar

Profitability

  • CCPP Contribution Advantage Profitability · Effective October 1, 2025 · Medium confidence INR 12,000 to INR 18,000 per metric ton
    we foresee, as of now, an impact which might range between INR 12,000 to INR18,000 per metric ton. It's an interplay between the two prices of gas and coal. So one may say that effective 1st October, assuming that it all goes well and it is commissioned, this is the advantage we foresee in our contribution.

    — D.V. Parikh

Volume

  • TDI Production Volume · FY26 · High confidence Close to installed capacity
    And looking forward to current financial year, we do not foresee any major issue in achieving the installed capacity production. We'll be close to that mark.

    — Nitin Patel

  • Ammonia Production (from oil) Volume · FY26 · High confidence 336,000 tons
    Ammonia from oil, we produced 3,36,000.

    — Nitin Patel

  • Ammonia Production (from gas) Volume · FY26 · High confidence 369,000 tons
    From gas, we produced 3,69,000 having a ratio of around 48% and 52%, respectively.

    — Nitin Patel

  • Weak Nitric Acid Production Volume · FY26 · High confidence 443,000 tons
    Weak nitric acid, we produce close to 4,43,000.

    — Nitin Patel

Sales

  • Ammonia Sales to Outside Market Sales · FY26 · Medium confidence 75,000-80,000 tons
    Okay. And of this, possibly we would have sold 75,000, 80,000 tons in the outside market, is a safe assumption? Yes, more or less like that.

    — Nitin Patel

Capex

  • FY26 Capex (part of INR 2,200 crores plan) Capex · FY26 · Medium confidence INR 300 crores
    Yes. It will be around INR300 crores. It will be around INR300 crores.

    — Jagdish Thakkar

  • Annual Maintenance Capex Capex · per annum · High confidence INR 200 crores
    If you see, the total R&M, normally when the shutdown is there, touches to around INR200 crores per annum taken together for both the complexes.

    — D.V. Parikh

What to watch in Q1 FY26

CCPP Commissioning & Contribution

Q3 FY26 (effective Oct 1, 2025)
Current Expected completion by September 2025
Target Operational, contributing INR 12,000-18,000/MT

Why it matters

Expected to significantly improve contribution and narrow TDI losses, impacting overall profitability.

CCPP plant, which is a boiler plus power plant, we are expecting to be completed by maybe September this year.

Risks & concerns

  • TDI-II Elongated Shutdown

    high

    Resulted in a loss of roughly INR 300 crores in topline and INR 100 crores in profits for FY25.

    Management acknowledged

  • NBS Subsidy Revision

    high

    Effective April 1, 2025, expected to impact GNFC by approximately INR 2,560 per metric ton.

    Management acknowledged

  • Methanol Plant Unprofitability

    medium

    Plant stopped operations from December due to uncompetitive gas prices, impacting future volumes and profitability.

    Management acknowledged

  • Toluene Price Pressure on TDI Margins

    medium

    Input cost advantage from lower toluene prices is offset by pricing pressure on TDI output, impacting profitability.

    Management acknowledged

  • Listed Investment Value Decline

    low

    Net loss of roughly INR 100 crores in other comprehensive income due to a decline in listed investment prices.

    Management acknowledged

Q&A highlights

5 direct
TDI-II Shutdown Impact & FY26 Outlook Direct
Combining both the plants, the production is down by 31%. TDI Bharuch is more or less on the plus side, plus 9%, whereas TDI Dahej, because of the extended shutdown, we are down by 44% in the volume. And looking forward to current financial year, we do not foresee any major issue in achieving the installed capacity production. We'll be close to that mark.

Management clarified the significant impact of the TDI-II shutdown on FY25 production but provided a positive outlook for achieving installed capacity in FY26, which is crucial for profit recovery.

Asked by Neerav, Anvil Wealth

Kearney's Expansion Plans and Investment Size Partial
When we started with Kearney, we took around INR15,000 crores worth of kitty, which we may look at for the purpose of investment. They have given a few options - with an investment size which goes up to around INR22,000 crores.

Management revealed the substantial scale of potential future investments based on Kearney's recommendations, indicating a long-term growth strategy focused on import substitutes, though specific projects are still pending a detailed feasibility report.

Asked by Aatur, ICICI Prudential Mutual Fund

Methanol Plant Operations and Economics Direct
Up to November, we had that advantage of contracting gas at a competitive price. And for about 7 to 8 months we ran the plant, that is a normal cycle we internally anticipated that we require so much time, and it ran well. But from effective December, again, the prices of gas have gone up and are not competitive in manufacturing. So the plant is stopped as of now. It's not in operation.

This explains why the methanol plant, despite strong volume growth, is currently not operational, highlighting the company's sensitivity to raw material (gas) prices and its decision to halt production when uneconomical.

Asked by Neerav, Anvil Wealth

NBS Subsidy Revision Impact Direct
effective 1st of April, the NBS subsidies have been revised. In case of GNFC, the impact is roughly INR2,600 per metric ton, INR2,560 to be precise.

Management proactively disclosed a specific, material financial impact on the fertilizer segment due to government policy changes, which will affect profitability from Q1 FY26.

FY26 Capex Breakdown and Maintenance Direct
No, no. It does not include maintenance capex as such. See the capex, which Jagdishbhai is referring to, is out of around INR2,200 crores, which is part of the presentation, which predominantly consists of 3 different natures, which is weak nitric acid of roughly INR1,420 crores, INR225 crores of ammonia make-up gas loop, which is undergoing certain cost escalation. And the third is CCPP, which is INR613 crores as of now.

This detailed breakdown clarifies the significant investment pipeline for FY26 and beyond, distinguishing between project-specific capex and annual maintenance, providing a clearer picture of future capital deployment.

Asked by Neerav, Anvil Wealth

Toluene Price Impact on TDI Profitability Partial
Yes, toluene, in fact many petrochemicals are going down, including toluene. But the issue is it also has an impact as of now on the TDI, which is under pricing pressure since last couple of months. So that advantage is actually taken away when it comes to the input cost advantage because the output prices are also under pressure.

Management explained that lower raw material costs (toluene) are not translating into higher margins for TDI due to simultaneous pressure on output prices, indicating continued challenges in maintaining profitability for this product.

Asked by Neerav, Anvil Wealth

Ammonia Valorization Strategy Direct
Actually, when we produce more of oil-based ammonia, if the downstream products, value-added products are not working out, then we think of selling the ammonia provided it is profitable. In this case, the downstream products worked quite well as you see from the Chemical segment result also and the overall Q4 results also. So the ammonia was more valorized in terms of value-added product rather than selling it out. So we did not sell any ammonia during Q4 or rather for the entire year.

Management clarified its strategy of prioritizing the conversion of ammonia into higher-value downstream products over direct sales, demonstrating a focus on optimizing product mix and profitability.

Asked by Neerav, Anvil Wealth

2 min read 5 chapters

Detailed narrative

Strong Q4 Performance and Dividend Hike

GNFC reported a robust Q4 FY25 with a PBT of INR 287 crores, contributing to a full-year PBT of INR 790 crores. The Board recommended a higher dividend of 180% (INR 18 per share) for FY25, an increase from 165% (INR 16.5 per share) in the previous year, reflecting confidence in the company's performance. The net worth of the company increased by INR 250 crores, driven by profit accrual despite dividend outgo, while PAT after OCI adjustment stood at INR 585 crores.

Strategic Capex and Expansion Plans

The company has total capex plans of approximately INR 2,900 crores at various stages of execution and approval. Following recommendations from Kearney, GNFC is considering significant expansion investments ranging from INR 15,000 crores to INR 22,000 crores, primarily targeting import substitute products. Key projects include a CCPP (boiler + power plant) with a capex of INR 613 crores, expected to be completed by September 2025, and a weak nitric acid project of INR 1,420 crores as part of a larger INR 2,200 crores plan.

Chemical Segment Drives Growth, Fertilizer Losses Reduce

The chemical segment demonstrated strong performance with higher volumes and improved profitability, notably from AN melt, technical grade urea, and aniline. Product-wise, FY25 saw significant volume growth in Methanol (+73%), TG Urea (+52%), Aniline (+15%), and AN Melt (+9%). Concurrently, losses in the fertilizer segment were reduced by INR 64 crores, even with lower overall volumes and revenue.

Operational Challenges and Raw Material Volatility

The elongated shutdown of TDI-II negatively impacted FY25 topline by INR 300 crores and profits by INR 100 crores, though the company expects to achieve installed capacity for TDI in FY26. The methanol plant, despite contributing 73% volume growth in FY25, ceased operations from December due to uncompetitive gas prices. While toluene prices have corrected, the benefit for TDI production is offset by pricing pressure on the output, indicating continued margin challenges.

NBS Subsidy Revision and Future Outlook

Effective April 1, 2025, revised NBS subsidies are expected to impact GNFC by INR 2,560 per metric ton. Management anticipates a contribution advantage of INR 12,000 to INR 18,000 per metric ton from the CCPP plant, effective October 1, 2025, which is expected to help narrow TDI losses. The company's strategy involves valorizing ammonia into value-added products rather than direct sales, and it projects FY26 production of 336,000 tons of ammonia from oil, 369,000 tons from gas, and 443,000 tons of weak nitric acid.

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