G S F C — Q4 FY25 earnings call

Call held 21 May 2025

Management summary

GSFC reported a robust FY25 performance with consolidated revenue growing 4% YoY to ₹9,534 crores and PAT improving 5% YoY to ₹591 crores, driven by increased fertilizer output. However, Q4 FY25 saw a QoQ decline in revenue and profits due to seasonality and faced headwinds from narrowed Caprolactam-Benzene spreads, lower P&K fertilizer subsidies, and elevated raw material costs. The company is strategically optimizing its product mix and progressing on key CAPEX projects.

Highlights

  • Consolidated FY25 revenue grew 4% YoY to ₹9,534 crores from ₹9,155 crores in FY24.

  • Consolidated FY25 PBT grew 7% YoY to ₹756 crores, and PAT improved 5% YoY to ₹591 crores.

  • Standalone FY25 revenue grew 6% YoY to ₹9,429 crores, with PBT up 11% and PAT up 9%.

  • Q4 FY25 consolidated PBT grew 239% YoY to ₹89 crores and PAT grew 194% YoY to ₹72 crores.

  • Fertilizer output increased 15% YoY to 16.46 lakh metric tons in FY25, and sales volume grew 4% YoY to 19.88 lakh metric tons.

Concerns

  • Consolidated Q4 FY25 revenue declined 2% YoY to ₹1,922 crores.

  • Consolidated Q4 FY25 revenue declined 32% QoQ, with PBT down 47% and PAT down 46% due to seasonal nature of fertilizer business.

  • Caprolactam-Benzene spread narrowed significantly from $693 per metric ton in FY24 to $578 per metric ton in FY25, impacting segmental profitability.

  • Subsidy rates for P&K fertilizers were lower YoY (Ammonium Sulphate by 28%, DAP by 17%, APS by 19%), tightening margin conditions.

  • Elevated prices of key raw materials (Sulphur, Sulphuric Acid, P2O5) and steep depreciation of Indian Rupee exerted pressure on production and import costs.

Key financials

2 periods

Q4 FY25

  • Consolidated Revenue
    ₹1,922 Cr
    YoY -2% QoQ -32%
  • Consolidated PBT
    ₹89 Cr
    YoY +239% QoQ -47%
  • Consolidated PAT
    ₹72 Cr
    YoY +194% QoQ -46%

FY25

  • Consolidated Revenue
    ₹9,534 Cr
    YoY +4%
  • Consolidated PBT
    ₹756 Cr
    YoY +7%
  • Consolidated PAT
    ₹591 Cr
    YoY +5%
  • Fertilizer Output
    16.46 lakh metric ton
    YoY +15%
  • Sales Volume
    19.88 lakh metric ton
    YoY +4%

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.

Capital allocation

high confidence
  • Capex ₹600 Cr
    • Urea CAPEX payments ₹453 Cr
    • SA V CAPEX payments ₹300 Cr
    Presently, all the CAPEX expenditure, we have been capitalizing the projects and in the next 6 months, we will be spending around Rs. 600 crores by the CAPEX payments to the Urea, Rs. 453 crores and Rs. 300 crores SA V.
  • Debt Debt disclosed
    Turning to the Company's balance sheet, we continue to maintain a robust financial position characterized by the high net worth to total asset ratio and long-term debt free capital structure.
  • Liquidity Liquidity disclosed Liquidity position supported by timely disbursement of government subsidies; received subsidy payments for Urea and P&K Fertilizers up to second week of April 2025.
    Our liquidity position has also been supported by the timely disbursement of the government subsidies reflecting a proactive fiscal approach by the authorities. As of date, the Company has received subsidy payments of Urea and P&K Fertilizers roughly up to the second week of April 2025.

Guidance & targets

Volume

  • Sales Volume Volume · Q1 FY26 · High confidence 4.5 lakh metric ton
    With coordinated efforts raw-mat availability, the Company is targeting sales of approximately 4.5 lakh metric ton in Quarter 1 of Financial Year '25-26.

    — S K Bajpai

Capacity

  • Sulphuric Acid V project commissioning Capacity · H1 FY26 · High confidence completion in its first half
    The Sulphuric Acid V project and PA-SA projects remain on schedule with the commissioning of SA V targeted for completion in its first half of Financial Year 2026.

    — S K Bajpai

  • GIPCL 75 MW solar project Phase-2 Capacity · May 31, 2025 · High confidence go live
    Phase-1 of GIPCL 75 MW solar project that is 25 MW has already been commissioned, and Phase-2 is expected to go live on 31st May 2025.

    — S K Bajpai

Profitability

  • Fertilizer EBITDA per metric ton Profitability · FY26 · High confidence ₹3,000 per metric ton
    Overall fertilizer Rs. 3,000 per metric ton will be safer side.

    — S K Bajpai

  • Industrial Products Margin Profitability · FY26 · Medium confidence better margin
    HX crystal on full swing for the whole year and any trading of the Ammonia and other products, we will be having a better margin in comparison to the current years that I can say.

    — S K Bajpai

What to watch in Q1 FY26

Q1 FY26 Sales Volume Target

next quarter
Current Targeting 4.5 lakh metric ton
Target Achievement of 4.5 lakh metric ton sales volume

Why it matters

Indicates demand and operational efficiency in the upcoming Kharif season.

With coordinated efforts raw-mat availability, the Company is targeting sales of approximately 4.5 lakh metric ton in Quarter 1 of Financial Year '25-26.

Risks & concerns

  • Narrowing Caprolactam-Benzene spread

    high

    Spread narrowed from $693/MT in FY24 to $578/MT in FY25, impacting segmental profitability.

    Management acknowledged

  • Elevated raw material prices and currency depreciation

    medium

    Challenging cost environment due to high Sulphur, Sulphuric Acid, P2O5 prices and steep Indian Rupee depreciation.

    Management acknowledged

  • Lower P&K fertilizer subsidy rates

    medium

    Subsidy rates for Ammonium Sulphate (-28%), DAP (-17%), and APS (-19%) were lower YoY, tightening margins.

    Management acknowledged

  • Caprolactam price pressure and Benzene volatility

    medium

    Caprolactam value expected to remain under pressure below $1,200/MT in Q1 FY26, with volatile Benzene prices.

    Management acknowledged

  • Headwinds from Chinese imports

    low

    Chinese import pressure persists in the industrial product segment.

    Management acknowledged

Q&A highlights

5 direct
DAP production profitability and government compensation Direct
Yes, I told you that this is already there in case the subsidy of 20% around in the DAP with effect from 1st of April. So partly it is compensated, but over and above, if there is any loss then we expect from the government to compensate it. And they are also providing this 4% return on the cost of sales along with GST reimbursement and other things. So I don't think that there is any loss to be booked in the books of the Company.

Clarifies the government's commitment to compensate for DAP production losses and ensure profitability, which is crucial for the fertilizer segment.

Asked by Neerav

Sulphuric Acid plant commissioning and profitability from outside sales Partial
No, I am afraid that we have mentioned anything that it would be commissioned in March or something like that because it is scheduled completion date is only in September second half of the current financial year. So the progress of the plant is as per the schedule, there is no delay, however, there may be 1 month or so here and there. But there is no delay as far as Sulphuric Acid commissioning is concerned. However, having said that, whatever the Sulphuric Acid is required for the production of APS and Ammonium Sulphate, we have tied up with the suppliers and we have made a long-term contract for the full year basis. As you rightly said that the Sulphur and Sulphuric Acid price is quite high in the market, but since it is a long-term agreement we had executed with the suppliers, so there will not be much impact when we are providing the caps on the pricing of the Sulphuric Acid.

Corrects the timeline for Sulphuric Acid plant commissioning to H1 FY26 and explains that external sales profitability will depend on market prices, as internal consumption is covered by long-term contracts.

Asked by Neerav

Industrial products profitability improvement drivers Direct
Yes, that is correct because the Caprolactam-Benzene spread is very low if you see. So what we have done that HX crystal plant we had commissioned last year, now it is running in full swing. Both our HX crystal plant is running in full swing, producing around 30 metric tons per day. So around 9000 metric tons per annum we will get in the supply of HX crystal. So that will reduce Caprolactam availability in the market and this HX crystal plant is very remunerative and is quite supportive in contribution level and margins also pretty high. One factor is this and second is that Ammonia trading we are doing, so whatever Ammonia we are importing and if there is any requirement from the current, present local requirement, then we supply the Ammonia so that is also one sector which adds into the contribution of IP segment.

Identifies the operational HX crystal plant (9000 metric tons/annum production) and profitable Ammonia trading as key drivers for improved industrial product margins, despite narrow Caprolactam-Benzene spreads.

Asked by Neerav

Outlook on PBIT margins for industrial products for FY26 Direct
Yes, as you see now that currently the Caprolactam-Benzene spread is hovering around $578. And I don't know whether this will come down further because there is no scope now. So presently Caprolactam prices also going ahead with $1,200. So it will improve what I see and as you rightly said, HX crystal on full swing for the whole year and any trading of the Ammonia and other products, we will be having a better margin in comparison to the current years that I can say.

Provides a positive outlook for FY26 industrial product margins, citing stable Caprolactam-Benzene spreads, Caprolactam prices above $1,200, and full-year contribution from the HX crystal plant and Ammonia trading.

Asked by Neerav

Reduction in shareholders' fund despite positive PAT Direct
No, I think that you are telling, whatever the profitability is there we are distributing dividend and other appropriation on the profits and moreover there is investment valuation at every year end, so it is a drastic reduction in the investment. ... So that has been reduced by Rs. 963 crores. So this is a very high reduction, but it depends upon the market price of the investing Company.

Clarifies that the reduction in shareholders' fund by ₹963 crores was due to investment revaluation at year-end, rather than operational losses or other accounting policies.

Asked by Vivek

Government notification regarding share buyback Partial
Presently, all the CAPEX expenditure, we have been capitalizing the projects and in the next 6 months, we will be spending around Rs. 600 crores by the CAPEX payments to the Urea, Rs. 453 crores and Rs. 300 crores SA V. So all these expenditures are available for the CAPEX and does not permit the management, I think that any buyback or such thing can be done immediately, but certainly it is a board call and they will think when the position we are comfortable with.

Indicates that a share buyback is not an immediate priority due to ongoing CAPEX commitments, but it remains a board decision for when the company is comfortable.

Asked by Vivek

Cost comparison of Ammonia production via natural gas vs. import Direct
No, it is not. The production is still cheaper than the imported Ammonia. ... Ammonia production also gives carbon dioxide, which is required for Urea production and other productions also, so standalone basis, you cannot consider that Ammonia has this thing.

Confirms that producing Ammonia from natural gas at their Fertilizer Nagar complex is still cheaper than importing, and highlights the additional benefit of CO2 byproduct for Urea production.

Asked by Ankur Agrawal

3 min read 7 chapters

Detailed narrative

Financial Performance Overview

Gujarat State Fertilizers & Chemicals Limited (GSFC) reported a robust financial year 2025, with consolidated revenue from operations growing 4% YoY to ₹9,534 crores. Consolidated PBT increased 7% YoY to ₹756 crores, and PAT improved 5% YoY to ₹591 crores. Standalone results also showed strong growth, with revenue up 6% YoY to ₹9,429 crores and PAT up 9% YoY to ₹573 crores. However, Q4 FY25 saw a 2% YoY decline in consolidated revenue to ₹1,922 crores and a significant QoQ decline of 32% in revenue, with PBT and PAT down 47% and 46% respectively, primarily due to the seasonal nature of the fertilizer business.

Operational Highlights and Volume Growth

The company achieved a 15% YoY growth in fertilizer output, reaching 16.46 lakh metric tons in FY25, up from 14.29 lakh metric tons in FY24. Sales volume also increased 4% YoY to 19.88 lakh metric tons, driven by manufactured APS sales. In Q4 FY25, fertilizer output rose 4.8% YoY to 3.47 lakh metric tons, and sales volume grew 0.8% YoY to 3.65 lakh metric tons. The HX crystal plant, commissioned last year, is now running at full swing, producing around 30 metric tons per day, contributing significantly to the industrial products segment.

Raw Material and Margin Headwinds

GSFC operated in a challenging cost environment in FY25, marked by elevated prices of key raw materials such as Sulphur, Sulphuric Acid, and P2O5, coupled with the steep depreciation of the Indian Rupee. The Caprolactam-Benzene spread narrowed significantly from $693 per metric ton in FY24 to $578 per metric ton in FY25, impacting segmental profitability. Additionally, subsidy rates for P&K fertilizers were lower YoY, with Ammonium Sulphate down 28%, DAP down 17%, and APS down 19%, further tightening margin conditions.

Strategic Initiatives and Capex Progress

The company is advancing its CAPEX plans, including the recent commissioning of a 15 MW solar power project at Charanka Patan. The Urea-II revamping project is operating at full capacity and is expected to be commissioned by the end of May 2025. Phase-1 (25 MW) of the GIPCL 75 MW solar project has been commissioned, with Phase-2 expected to go live by May 31, 2025, projected to deliver annual savings of approximately ₹30 crores. The Sulphuric Acid V project and PA-SA projects are on schedule for commissioning in H1 FY26.

Fertilizer Segment Outlook

GSFC enters Q1 FY26 with an optimistic outlook for its fertilizer segment, supported by a favorable monsoon forecast and timely policy interventions. The early announcement of revised Nutrition Based Subsidy (NBS) rates, with a 17%-26% increase in support for DAP and NPK fertilizers, reflects government commitment. The company is targeting sales of approximately 4.5 lakh metric tons in Q1 FY26 and expects an overall fertilizer EBITDA of ₹3,000 per metric ton, with government compensation for DAP production losses.

Industrial Products Performance

Despite headwinds from Chinese imports, the industrial product segment is expected to remain stable. The commissioning of the HX crystal plant, producing 9,000 metric tons per annum, is highly remunerative and contributes significantly to the IP segment's profitability. Ammonia trading also adds to the segment's contribution. Management anticipates better margins for industrial products in FY26 compared to current years, supported by stable Caprolactam-Benzene spreads and Caprolactam prices above $1,200.

Capital Structure and Subsidies

GSFC maintains a robust financial position with a high net worth to total asset ratio and a long-term debt-free capital structure, enhancing its ability to fund CAPEX and absorb external shocks. The company's liquidity position is supported by timely disbursement of government subsidies, having received payments for Urea and P&K Fertilizers up to the second week of April 2025. The company confirmed that the reduction in shareholders' funds by ₹963 crores was due to investment revaluation at year-end.

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