G S F C

GSFC delivered a robust Q3 FY25 with consolidated top-line growth of 40% YoY, PBT increasing by 16% YoY, and PAT by 13% YoY. This performance was attributed to improved efficiency, higher production, and strategic product mix optimization. Fertilizer output rose significantly by 23% YoY to 77,000 metric tons, and sales volume increased by 25% to 1.254 lakh metric tons, demonstrating strong operational execution.

The company faced a challenging cost environment with rising prices of essential raw materials like sulphur, sulphuric acid, and P2O5, with P2O5 prices increasing from $948 to $1,060 per metric ton in Q3. Additionally, INR depreciation impacted costs. To mitigate, GSFC optimized its product mix towards more profitable fertilizers and industrial products, increased capacity utilization, and benefited from a 10% YoY reduction in natural gas prices in Q3.

The industrial segment experienced reduced profitability due to a significant decline in the Capro-benzene spread, from $674 to $588 per metric ton. In response, GSFC is importing cheaper Anone to replace its own production and diverting caprolactam production to the more profitable HX Sulphate plant, which is now stabilized at 30 metric tons per day capacity. The company expects stable demand but acknowledges the threat from cheap Chinese imports in the coming quarter.

GSFC has a robust capex plan, with approximately INR500 crores in capital work in progress. Key projects like the Sulphuric Acid V plant (₹250 crores) and Urea-II Revamping project (₹450 crores over 3 years) are expected to be operational by the end of the current fiscal year. The GIPCL 75-megawatt solar power plant, with a ₹50 crore equity participation, is anticipated to be operational in H1 next financial year, providing 37.5 MW of cheaper power. The larger Sikka phosphoric acid/sulphuric acid plant (₹1,500 crores) is still in the detailed engineering stage.

The company maintains a debt-free status with a strong balance sheet and robust liquidity, including INR2,500 crores in cash and bank balances. While a 30% dividend payout is maintained, management indicated that decisions on further corporate actions like bonus issues or buybacks, as per the Gujarat government circular, would be taken by the Board after FY26, following the completion of current expansion plans requiring significant capital outlay (INR500 crores for suppliers).

To ensure raw material security, especially for phosphoric acid production, GSFC is actively scouting for long-term contracts for rock phosphate. The executive team, including the MD, has visited Dubai and engaged with major suppliers like Jordan Rock Phosphate. The commissioning of the 1,98,000 tons Sulphuric Acid V plant will increase the total sulphuric acid capacity to 0.8-0.9 million tons, further reducing reliance on external sourcing for phosphoric acid.