Krishana Phoschem Limited

Krishana Phoschem Limited reported a robust Q3 FY26, with Revenue from Operations reaching a record ₹659.11 crores, marking a significant 116.8% year-over-year increase from ₹304.03 crores in Q3 FY25. This growth was supported by strong fertilizer demand and volume expansion. EBITDA for the quarter increased by 58.4% YoY to ₹70.1 crores, benefiting from enhanced operating efficiencies and a managed cost environment. Net Profit After Tax (PAT) also saw substantial growth, rising 62.3% YoY to ₹33.3 crores, leading to an all-time high EPS of ₹5.39 for the quarter.

The company achieved its highest-ever fertilizer production volumes of 1,13,155 MT during Q3 FY26. Capacity utilization remained exceptionally high, with NPK/DAP operations running at 98% and the SSP plant exceeding its capacity at 107%. This high utilization underscores the strong demand for the company's products and its operational effectiveness in meeting market needs. For the nine-month period, revenue stood at ₹1,663 crores, up 88%, with PAT at ₹97 crores, an 80.8% increase from ₹54 crores in the prior year.

The 50% expansion of the NPK/DAP capacity at Meghnagar is progressing as scheduled and is expected to be commissioned by March 2026. This expansion, which includes DAP, NPK, and sulfuric acid capacities, is projected to add approximately ₹1,000 crores in annual revenue potential. Management anticipates around 60% capacity utilization in the first year of the new plant's operation, which is slated to begin commercial production in April. This strategic move is expected to further strengthen operating performance and enhance long-term growth visibility.

While overall operating margins compressed to 10.64% in Q3 FY26 from 14.56% YoY, primarily due to lower profitability from trading activities, the integrated production line saw margin expansion from 14% to 15%. Raw material prices, particularly for sulfur and sulfuric acid, experienced significant increases during the quarter. Sulfur prices rose from ₹28,000-29,000 per ton in April to ₹45,000 per ton by December, and sulfuric acid from ₹8,000 to ₹12,000 per ton in the same period. Management affirmed its commitment to maintaining manufacturing EBITDA margins at 14-15% by adjusting pricing if necessary.

The company benefited from a favorable agricultural landscape and supportive government policies, including new Nutrient Based Subsidy (NBS) rates for Rabi 2025-26 and the 'Mission for Aatmanirbharta in Pulses' with an ₹11,440 crore budget. The Indian phosphatic fertilizer industry is shifting from traditional DAP use towards balanced NPK and SSP blends, creating opportunities for integrated manufacturers like Krishana. The government's enforcement actions against diversion and black marketing also ensured timely availability of fertilizers to genuine farmers.

The company's corporate tax rate is currently around 40% due to being under MAT and falling into the 30% tax slab plus surcharge and cess. Management indicated that once the company moves out of MAT, the tax rate would reduce to 22%, leading to a significant reduction in tax liability and improved EPS. The company's cash accruals are well synchronized with its expansion plans, and currently, no additional capital is required, despite having shareholder approval for the issuance of shared debentures as an enabling provision.