Paradeep Phosphates Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Paradeep Phosphates delivered a robust start to FY26, characterized by significant volume growth and margin expansion. The company benefited from an early monsoon, strategic backward integration, and a favorable shift in product mix towards high-margin NPK grades. Management remains confident in sustaining momentum through capacity expansions and the upcoming MCFL merger, despite rising raw material costs.

Highlights

  • Revenue from operations rose 58% YoY to ₹3,754 crores, driven by higher production and sales volumes.

  • EBITDA (including other income) nearly doubled to ₹493 crores, with an EBITDA per ton of approximately ₹6,600.

  • Profit After Tax (PAT) reached ₹256 crores, supported by improved product mix and strategic sourcing.

  • Finished fertilizer production grew 23% YoY to 6.64 lakh tons; primary sales increased 34% YoY to 7.42 lakh tons.

  • Flagship N-20 grade maintained strong momentum with sales of 2.24 lakh tons, a 45% YoY growth.

  • Sulphuric acid capacity expansion to 2 million tons per annum is on schedule for Q3 FY26 commissioning.

  • Net debt-to-equity ratio maintained at a healthy 0.77x with cash at hand of ₹1,200 crores.

  • Proposed merger with Mangalore Chemicals & Fertilizers (MCFL) is in the final stages of the NCLT process.

Key financials

  1. Revenue ₹3,754 Cr +58%YoY
  2. EBITDA ₹493 Cr +100%YoY
  3. PAT ₹256 Cr
  4. Sales Volume 7.42 lakh tons +34%YoY
  5. EBITDA per ton ₹6,600
  6. Net Debt to Equity 0.77

What they filed

Q1 FY27: revenue up 36.0%, net profit up 24.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,619 4,990 4,194 4,504 6,872 +49%5,749 +15%4,702 +12%6,124 +36%
EBITDA507 438 383 580 657 +30%472 +8%442 +15%720 +24%
Net profit255 209 172 317 342 +34%182 −13%156 −9%393 +24%
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

  • Finished Fertilizers
    6.64 lakh tons Production Volume7.42 lakh tons Sales Volume2.24 lakh tons N-20 Sales Volume
  • Intermediaries
    1.13 lakh tons Phosphoric Acid Production2.83 lakh tons Sulphuric Acid Production

Guidance & targets

Volume

  • Annual Sales Volume Volume · FY26 · High confidence 3.1 million tons plus
    In terms of the overall guidance, I think we have already indicated that we would be doing 3.1 million ton plus in line with our budgeted numbers.

    — Harshdeep Singh, CCO

Margin

  • Sustainable EBITDA per ton Margin · FY26 · Medium confidence ₹5,000
    But directionally... the sustainable number as we speak today is around 5,000 number.

    — Alok Saxena, Head of Corporate Finance

Capacity

  • Sulphuric Acid Capacity Expansion Capacity · Q3 FY26 · High confidence 2 million tons per annum

    From 1.39 million tons per annum today

    The sulphuruc acid capacity expansion Paradeep from 1.39 million tons per annum to 2 million tons is on schedule for commissioning by the third quarter of this fiscal year.

    — Rajeev Nambiar, COO

  • Phosphoric Acid Capacity Expansion Capacity · next 2 years · Medium confidence 0.7 million tons per annum

    From 0.5 million tons per annum today

    The phosphoric acid expansion, which will raise capacity from 0.5 million to 0.7 million ton annum is progressing well and is expected to be completed within the next 2 years.

    — Rajeev Nambiar, COO

Debt

  • Working Capital Debt Maintenance Debt · Long term · Medium confidence ₹1,000 crores
    And long term, we have got around INR 1,000 crores we will be maintaining that one... our guidance is that it will be around INR 1,000 crores.

    — Bijoy Biswal, CFO

Risks & concerns

  • Rising Raw Material Prices

    medium

    Sulphur and phosphate prices have been increasing, though management sees some recent softening in sulphur.

    Both acknowledged

  • Subsidy Uncertainty for H2

    medium

    Management cannot comment on the H2 subsidy trajectory until the government notification is released.

    Analyst deflected

  • DAP Price Regulation

    low

    DAP prices are capped by government guidance, limiting the ability to pass on cost increases compared to NPK grades.

    Management acknowledged

Areas of evasion (2)

  • Quantifying the exact contribution of inventory gains to EBITDA.
  • Unit-wise EBITDA guidance for Paradeep vs. Goa plants.

Q&A highlights

2 direct
Drivers of Extraordinary EBITDA Growth Direct
If you look at it dominantly, the volume growth of 34% significantly contributed to the growth in the revenue and the bottom line. The further thing was... the benefit because of backward integration and the market realization.

Clarifies that the profit jump wasn't just a one-off but driven by operational scale and pricing power in NPK grades.

Asked by Prashant Biyani, Elara Capital

Sustainability of EBITDA per ton Partial
Right now for this quarter, we have a little bit higher EBITDA per ton. But going forward, as per our guidance, it will be around INR 5,000 per metric ton.

Management signals that the current ₹6,600/ton is above long-term sustainable levels, setting realistic expectations for the rest of the year.

Asked by S. Ramesh, Nirmal Bang Equities

Rock Phosphate vs. DAP Price Correlation Direct
DAP is a purely demand kind of supply-linked commodity... And this year, China has not been on the supplier side as far as DAP is concerned, which has pushed up the prices. However, rock, the sources are multiple and the import pattern is different.

Explains why raw material (rock) prices haven't spiked as much as finished product (DAP) prices, highlighting a margin tailwind.

Asked by Manish Mahawar, Antique Stock Broking

2 min read 5 chapters

Detailed narrative

Operational Excellence and Volume Surge

Paradeep Phosphates reported a stellar Q1 FY26, with revenue jumping 58% YoY to ₹3,754 crores. This was underpinned by a 34% increase in sales volumes to 7.42 lakh tons and a 23% rise in production to 6.64 lakh tons. The early onset of the monsoon and healthy reservoir levels significantly aided demand, allowing the company to operate at close to 100% capacity utilization.

Strategic Shift to NPK and Pricing Power

The company successfully optimized its product mix, with NPK sales growing by 48% YoY. Specifically, the flagship N-20 grade saw sales of 2.24 lakh tons, a 45% increase. Management took realistic price hikes in NPK grades, with realizations moving from ₹1,470 to a range of ₹1,850-₹1,900 per bag, which helped drive the EBITDA per ton to a record ₹6,600 for the quarter.

Backward Integration as a Competitive Moat

Backward integration remains a core pillar of Paradeep's strategy. The Paradeep site is currently 95% backward integrated, providing a captive advantage of approximately $150 per ton compared to imported phosphoric acid. Ongoing expansions in sulphuric acid (to 2 MTPA by Q3 FY26) and phosphoric acid (to 0.7 MTPA within 2 years) are expected to further solidify this cost leadership.

MCFL Merger and Future Scale

The proposed merger with Mangalore Chemicals & Fertilizers (MCFL) is nearing completion, having received shareholder approval. This merger is expected to add approximately 7 lakh tons of capacity and provide strategic access to markets in Southern India. Management intends to announce further capex and growth plans once the merger process concludes.

Financial Health and Working Capital Management

Despite the scale-up, the company maintained a healthy balance sheet with a net debt-to-equity ratio of 0.77x. Gross debt stands at approximately ₹4,000 crores, largely comprising working capital debt. Subsidy receivables are being managed efficiently, with receivable days under 50, and the company received nearly ₹1,500 crores in subsidies during the quarter.

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