Detailed Narrative
Record Performance in Q2 & H1 FY26
Krishana Phoschem Limited reported its highest-ever quarterly revenue of ₹608 crores in Q2 FY26, marking a significant 102% YoY growth, and a record EBITDA of ₹73 crores, up 82% YoY. For H1 FY26, revenue reached ₹1,003 crores (up 73% YoY) and EBITDA ₹139 crores (up 69% YoY), demonstrating strong growth and operational excellence. PAT for Q2 and H1 FY26 stood at ₹33 crores (up 99% YoY) and ₹64 crores (up 93% YoY) respectively, leading to a Q2 EPS of ₹5.4.
Operational Excellence and Capacity Utilization
The company achieved its highest-ever quarterly fertilizer production of 95,783 MT, with H1 production reaching 1,90,005 MT. SSP capacity utilization was remarkable at 111% in Q2, showcasing efficiency. Sales volumes also hit quarterly and half-yearly highs, with 1,21,491 MT in Q2 and 2,12,441 MT in H1, driven by robust market demand and efficient plant operations. NPK sales stood at 72,102 MT for Q2 and 1,37,081 MT for H1.
Strategic Expansion and Funding
The Meghnagar expansion project is progressing as planned, with a total investment of ₹142 crores. This project aims to enhance NPK/DAP capacity by 1,65,000 MTPA and Sulphuric Acid capacity by 99,000 MTPA. Civil work is underway, and commissioning is targeted for March 2026. The expansion is being funded through a ₹75 crore term loan and internal accruals, with management expecting approximately ₹2,000 crores in additional revenue post-commissioning.
Margin Dynamics and Raw Material Trends
The overall operating margin experienced a 1% YoY drop in Q2, primarily due to a higher contribution from lower-margin trading activities, which constituted 20-22% of Q2 revenue at a 2% margin, compared to manufacturing's 11-12% margin. Additionally, increased sulfur prices, rising from ₹27,500 per tonne in April 2025 to ₹33,000 per tonne currently, impacted manufacturing margins by 70-80 basis points. Management anticipates that an expected upward revision in subsidy over the next six months will help compensate for this margin pressure.
Working Capital and Debt Management
Higher working capital requirements were noted in September, mainly driven by increased prices for DAP and NPK complexes and trading activities. The company's long-term debt outstanding is approximately ₹150 crores, compared to an EBITDA of roughly ₹130-140 crores. Management expects trade receivables from trading to be realized by December, aiming to maintain a working capital cycle of around six months or slightly less. Subsidy receivables typically take about 100 days to realize.
Industry Outlook and Policy Support
Favorable monsoon conditions and government policies, including MSP hikes and a push for balanced nutrition, are driving strong demand for phosphatic fertilizers. India's focus on fertilizer self-reliance, with increased domestic urea production (up 35% in FY24-25) and DAP/NPK manufacturing (up 44%), is stabilizing supply chains amidst global uncertainties. The SSP market remains resilient, catering to cost-sensitive small and medium farmers seeking balanced nutrient solutions.