G S F C — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

GSFC reported a strong Q2 FY26 with consolidated revenue up 21% YoY to ₹3,187 crores and PAT up 9% YoY to ₹324 crores. The Industrial Products segment saw a significant turnaround, moving from a loss to a profit of ₹54 crores, driven by HX Crystal and ammonia trading. Despite sharp increases in raw material costs for fertilizers, the company managed growth, supported by DAP trading and timely subsidy disbursements. The outlook for the Rabi season is positive, though caprolactam margins remain under pressure.

Highlights

  • Consolidated Revenue from operations expanded by 21% YoY to ₹3,187 crores.

  • Consolidated PAT rose by 9% YoY to ₹324 crores.

  • Industrial Products segment registered a strong turnaround with EBIT improving from a loss of ₹17 crores to a profit of ₹54 crores.

  • Fertilizer business saw a 21% gain in revenue and increased sales volume from 5.47 lakh metric ton to 6.08 lakh metric ton.

  • The company has received subsidy dues for P&K fertilizers up to third week of September and urea claims up to second week of October.

Concerns

  • Fertilizer segment EBIT moderated to ₹224 crores from ₹257 crores YoY due to sharp rises in imported raw material costs.

  • Phosphoric acid costs increased by 20%, sulfuric acid by 123%, and sulphur by 150%.

  • Urea realization dropped by 15%, putting pressure on margins.

  • Caprolactam benzene spread declined from $620 per metric ton to $512 per metric ton, expected to remain under pressure in the coming quarter.

Key financials

  1. Revenue from Operations ₹3,187 Cr +21%YoY
  2. PBT ₹428 Cr +11%YoY
  3. PAT ₹324 Cr +9%YoY
  4. Fertilizer Sales Volume 6.08 lakh metric ton +11.2%YoY

What they filed

Q1 FY27: revenue up 64.1%, net profit up 14.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,635 2,814 1,922 2,184 3,187 +21%2,941 +5%2,633 +37%3,583 +64%
EBITDA284 158 80 193 337 +19%178 +13%83 +4%233 +21%
Net profit298 134 72 139 324 +9%158 +18%52 −28%159 +14%
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 EBIT
₹278 Cr Total
  • Fertilizer Business ₹224 Cr 80.6%
  • Industrial Products Segment ₹54 Cr 19.4%

Capital allocation

high confidence
  • Capex Capex disclosed
    • Sulfuric Acid V project commissioning
    • Sikka DAP plant conversion to produce NPK grade fertilizers
    The Sulfuric Acid V project is slated to be commissioned in coming quarter of current financial year, providing both incremental capacity and cost efficiency benefits. The project will cater the requirement of Sulfuric Acid for manufacturing of Fertilizers like Ammonium Sulphate and Ammonium Phosphate Sulphate. Further, the steam generated therefrom shall be available for utilization at Vadodara Complex. [...] We have just started this in Sikka DAP trend to be converted for or having an additional facility to produce NPK grade of fertilizers. So that there is no much expenditure till now.
  • Debt Debt disclosed
    We continue to maintain a strong balance sheet with no long-term debt, healthy net worth and adequate liquidity.
  • Liquidity Liquidity disclosed Adequate liquidity supported by timely disbursement of government subsidies.
    We continue to maintain a strong balance sheet with no long-term debt, healthy net worth and adequate liquidity. Our liquidity position has also been supported by the timely disbursement of government subsidies, reflecting a proactive fiscal approach by the authorities.

Guidance & targets

Volume

  • Fertilizer Sales Volume Volume · Q3 FY26 · High confidence 5.5 lakh tons to 6 lakh tons
    Actually if you see the overall fertilizer, next quarter, we are expecting this quarter, Q3, again, 5.5 lakhs tons to 6 lakhs tons this thing.

    — Sanjeev Varma

Capex

  • Sulfuric Acid V Project Commissioning Capex · Q3 FY26 · High confidence Commissioned
    The Sulfuric Acid V project is slated to be commissioned in coming quarter of current financial year, providing both incremental capacity and cost efficiency benefits.

    — S.K. Bajpai

Margin

  • Caprolactam Benzene Spread Margin · Coming quarter · High confidence Remain under pressure
    The caprolactam benzene spread is expected to remain under pressure in coming quarter amid oversupply conditions, a prolonged shutdown in China, enhanced US tariffs and continued influx of low-priced Chinese imports, which may keep prices across the nylon value chain subdued.

    — S.K. Bajpai

Demand

  • Melamine Demand Demand · Next quarter · High confidence Remain steady
    Demand for melamine is projected to remain steady in both domestic and export markets.

    — S.K. Bajpai

  • HX Crystal Demand Demand · Next quarter · High confidence Stay soft domestically, export volumes improve
    HX Crystal demand is likely to stay soft in the domestic market, though export volumes are expected to improve.

    — S.K. Bajpai

  • Other Industrial Products Demand Demand · Next quarter · High confidence Remain stable, pricing pressure may persist
    Demand for other industrial product is expected to remain stable during the quarter, though pricing pressure may persist due to cheaper Chinese imports.

    — S.K. Bajpai

Profitability

  • Overall Profitability Profitability · Next quarter and years · High confidence Will continue
    So this is not a one-off its kind, but it will continue for a longer period. So I think this profitability will continue. There is no hindrance I am just now foreseeing for the next quarter or coming quarter and years.

    — Sanjay Bajpai

What to watch in Q3 FY26

Sulfuric Acid V Project Commissioning

Q3 FY26
Current Slated for commissioning in Q3 FY26
Target Commercial operations commenced

Why it matters

This project is expected to provide incremental capacity, cost efficiency benefits, and relief from high sulfuric acid prices, positively impacting fertilizer margins.

The Sulfuric Acid V project is slated to be commissioned in coming quarter of current financial year, providing both incremental capacity and cost efficiency benefits.

Risks & concerns

  • Raw Material Cost Volatility

    medium

    Sharp rises in phosphoric acid (+20%), sulfuric acid (+123%), and sulphur (+150%) impacted fertilizer EBIT.

    Management acknowledged

  • Caprolactam Benzene Spread Pressure

    medium

    Spread declined from $620/MT to $512/MT and is expected to remain under pressure due to oversupply, China shutdown, and US tariffs.

    Management acknowledged

  • Urea Realization Drop

    medium

    15% drop in urea realization put pressure on margins.

    Management acknowledged

  • Cheaper Chinese Imports

    medium

    May cause pricing pressure for other industrial products.

    Management acknowledged

Q&A highlights

6 direct
Fertilizer Volume Guidance for FY26 Partial
Actually if you see the overall fertilizer, next quarter, we are expecting this quarter, Q3, again, 5.5 lakhs tons to 6 lakhs tons this thing. But Q4 is again a lean season for fertilizers. And that is what we will be we have been a little conservative on that thing.

Analyst sought a revised full-year volume guidance, but management provided only Q3 and Q4 expectations, not a consolidated FY26 revision.

Asked by Nirav Jimudia

Impact of NBS Revision on Fertilizer Margins Direct
There will not be much variation because only 10% phosphorus and sulphur content is increased. So that around 5% to 7%. 7%, in case of DAP increase, which is not a very big increase. However, if you see the prices of phosphoric acid has increased 20% and sulphur, you know that it is 150%. So we are commissioning Sulfuric Acid V project. So, sulfuric acid will be available for production of ammonium sulphate and ammonium phosphate sulphate in Vadodara complex. So that will give some type of relief while the increased price of sulfuric acid and sulphur. So that may have a positive impact on the profit margins of the ammonium sulphate and ammonium phosphate sulphate.

Clarified that while NBS revision has limited direct impact, the upcoming Sulfuric Acid V project will provide margin relief by reducing reliance on expensive imported raw materials.

Asked by Nirav Jimudia

Annual Raw Material Requirements (Ammonia, Phos Acid, Sulfuric Acid) Direct
See, in case of our Sikka unit, we need around 3 lakh ton to 3.5 lakhs ton PA solution for running the plant at 100% capacity, the way we are running today and around 1.5 lakh tons of ammonia. ... Ammonia is 1,350 metric tons per day which means it is around 4.4 lakhs tons. And current sulfuric acid 5.77 lakhs metric ton per day, ammonia is at 4.45 lakhs ton. And in case of phosphoric acid, we have here 60,000 metric ton only capacity. ... In Sikka, we don't have any capacity there for production. It's completely imported.

Provided specific capacities and import dependencies for key raw materials, highlighting the strategic importance of new projects like Sulfuric Acid V.

Asked by Nirav Jimudia

Drivers of Industrial Products Profitability Direct
No, this Rs.53 crores is not only from the ammonia. The major part of the profitable product is HX Crystal, which we are producing in the Baroda complex and it comes under the IP segment. So the HX Crystal is a good product where the intermittent product HAS of caprolactam product is diverted to the manufacture HX crystal. ... So ammonia trading is one part of the IP segment, but there are some more activities for improving this IP segment results.

Clarified that the strong turnaround in Industrial Products was multi-faceted, primarily driven by HX Crystal production and melamine exports, in addition to ammonia trading.

Asked by Nirav Jimudia

Urea Revamp Project Benefits and Fixed Cost Reimbursement Direct
Yes. Urea revamping project, as you rightly said, has cut down the steam consumption. And the government has still not fixated the subsidy. So it is under consideration of the government, and they will provide something whatever the rate they are fixing for GSFC, for subsidy reimbursement. And we have already requested government to consider this return on net worth, what we have incurred the capital cost for the revamping project. ... So it is under consideration on government. Second, fixed cost, it is also going on from the government level, and we have represented and given our fixed cost expectation and they are in dialogue with all the companies, not only from GSFC.

Provided an update on the benefits of the urea revamp and ongoing discussions with the government regarding subsidy fixation and fixed cost reimbursement, which could impact future profitability.

Asked by Nirav Jimudia

Continuity of Ammonia Trading Profitability Direct
No, no, this will continue. As I have narrated that it is import price plus delta. So it is a term contract. So that margin will always be available till the time our contract is there with the corporates. And we are supplying ammonia with the same margin.

Confirmed that the profitable ammonia trading is based on long-term contracts with a fixed margin structure, indicating its sustainability rather than being a one-off event.

Asked by Saket Kapoor

Capitalization of Capex and Future Projects Direct
Second half is sulfuric acid V project, which is slated to be commissioned just within a month or so. So that work in progress must be lying in the capital work in progress. But apart from that, there is no major project to be capitalized in the near future. We have just started this in Sikka DAP trend to be converted for or having an additional facility to produce NPK grade of fertilizers. So that there is no much expenditure till now.

Clarified the immediate capex capitalization plans, focusing on the Sulfuric Acid V project and indicating that the Sikka DAP conversion is in early stages with minimal expenditure so far.

Asked by Saket Kapoor

2 min read 5 chapters

Detailed narrative

Strong Q2 FY26 Financial Performance

Gujarat State Fertilizers & Chemicals Limited (GSFC) reported a robust Q2 FY26, with consolidated revenue from operations expanding by 21% year-on-year to ₹3,187 crores. Profit Before Tax (PBT) increased by 11% YoY to ₹428 crores, and Profit After Tax (PAT) rose by 9% YoY to ₹324 crores. On a quarter-over-quarter basis, revenue grew by 46%, PBT by 132%, and PAT by 134%, reflecting strong seasonal demand in the fertilizer segment.

Fertilizer Business Growth Amidst Raw Material Headwinds

The fertilizer business achieved a 21% revenue gain, with sales volume increasing from 5.47 lakh metric tons to 6.08 lakh metric tons, primarily driven by significant DAP trading. However, the segment's EBIT moderated to ₹224 crores from ₹257 crores due to sharp increases in imported raw material costs: phosphoric acid by 20%, sulfuric acid by 123%, and sulphur by 150%. A 15% drop in urea realization also pressured margins, though softer natural gas and ammonia prices provided some relief.

Industrial Products Segment Turnaround

The Industrial Products segment demonstrated a strong turnaround, with sales up 13% YoY to ₹618 crores and EBIT improving significantly from a loss of ₹17 crores to a profit of ₹54 crores. This improvement was attributed to higher sales of traded products like ammonia and increased production volume of HX Crystal. Despite headwinds from a decline in the caprolactam benzene spread (from $620/MT to $512/MT), cost optimization and product mix management supported profitability.

Strategic Capex and Financial Stability

GSFC is advancing its capex roadmap, with the Sulfuric Acid V project slated for commissioning in Q3 FY26. This project will enhance sulfuric acid capacity for fertilizer manufacturing and provide steam for the Vadodara Complex. The company also initiated a project to convert its Sikka DAP plant to produce NPK grade fertilizers. Financially, GSFC maintains a strong balance sheet with no long-term debt, healthy net worth, and adequate liquidity, further bolstered by timely government subsidy disbursements totaling ₹1,176 crores in Q2.

Positive Outlook for Rabi Season and Continued Profitability

Management expressed confidence in the upcoming Rabi season (Q3 FY26), expecting healthy demand for agri inputs due to favorable monsoon and higher minimum support prices. The government's proactive arrangement of imported DAP and urea ensures no fertilizer shortages. The company anticipates stable demand and turnover in the Industrial Products segment, with overall profitability expected to continue due to ongoing cost optimization measures like the urea revamp project and solar plant installations.

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