Paradeep Phosphates Limited — Q3 FY26 earnings call

Call held 4 Feb 2026

Management summary

Paradeep Phosphates delivered strong operational and financial results for Q3 and 9M FY26, driven by volume growth and product mix optimization. The company is actively pursuing backward integration and capacity expansion projects, with several key initiatives nearing completion. While facing short-term pressures from raw material volatility, management remains optimistic about future growth and profitability, supported by expected NBS subsidy revisions and strategic investments.

Highlights

  • Production in Q3 FY26 increased by 13% Y-o-Y to 1 million tons, marking the second consecutive quarter at this level.

  • For 9M FY26, production reached 2.86 million tons (up 15% Y-o-Y) and sales reached 3.37 million tons (up 17% Y-o-Y).

  • 9M FY26 revenue grew by 34%, EBITDA by 45%, and PAT by 71% Y-o-Y, reflecting strong volume growth and quality of earnings.

  • The fifth evaporator at Paradeep and the 1,500 tons sulphuric acid plant are now operational, with the latter reaching rated capacity.

  • The company's long-term and short-term credit ratings were upgraded to A- and A1+, respectively, indicating strong fundamentals and improved credit profile.

Concerns

  • Global uncertainty, raw material price volatility, and currency volatility are expected to put pricing pressure in the short term.

  • Sulphur prices have significantly increased from INR 150-200 to INR 540-550, impacting raw material costs.

  • An inventory buildup, primarily of raw materials, occurred in Q3 FY26 due to high prices, though it is expected to liquidate in the upcoming quarter.

Key financials

2 periods

Q3

  • Production
    1 million tons
    YoY +13%
  • EBITDA per Metric Ton
    ₹4,700
  • Sulphuric Acid Production
    4.5 lakh metric tons
  • Phosphoric Acid Production
    1.45 lakh metric tons

9M

  • Production
    2.86 million tons
    YoY +15%
  • Sales
    3.37 million tons
    YoY +17%
  • Revenue Growth
    34%
  • EBITDA Growth
    45%
  • PAT Growth
    71%
  • YTD EBITDA per Metric Ton
    ₹5,300

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.

Capital allocation

high confidence
  • Capex ₹500 Cr
    • Total capex plan (unspecified period) ₹3,600 Cr
    • Granulation (1 million tons) ₹800 Cr
    • Standalone phosphate (0.3 million tons) ₹800 Cr
    • Phosphoric and Sulphuric acid (Paradeep, 0.3M phosphoric, 1M sulphuric) ₹1,500 Cr
    • Energy efficiency project (Goa) ₹220 Cr
    • Maintenance capex ₹350 Cr
    We have spent almost INR 450 crores in this nine months period. FY26, already we have spent around INR 450 crores, FY25 and FY26. So another INR 50 crores will be spent. So for the year, we'll be closing at INR 500 crores. And next year, the budget is that our regular maintenance capex around INR 350 crores. (Bijoy Biswal, page 15) ; of the total capex of INR 3,600 crores that we are doing, if I have to bifurcate product-wise, how much would be the capex for one million tons granulation and for 0.25 phosphoric acid and 0.75 million tons sulphuric acid at Paradeep site? (Prashant Biyani, page 4) ; Granulation will cost you around INR 800 crores. And the standalone phosphate of 300,000 will cost you another INR 800 crores to INR 900 crores. (Alok Saxena, page 5) ; Phosphoric and sulphuric acid, what we are planning at Paradeep that 0.3 million of phosphoric acid and one million of sulphuric acid will cost around INR 1,500 crores. (Bijoy Biswal, page 5) ; Goa actually, we are going to complete this energy efficiency program by end of this quarter and which will reduce it by 0.3 Gcal actually. And that will release substantial amount. And we are expecting a supportive energy norms, new energy norms coming up, which is expected to get announced anytime during this quarter. (Rajeev Nambiar, page 5) ; It's around INR 220 crores. (Rajeev Nambiar, page 5)
  • Debt Gross ₹5,400 Cr · Net ₹5,450 Cr
    So net debt is around INR 5,450 crores as of 31st December. (Bijoy Biswal, page 6) ; Gross debt is around INR 5,400 crores after netting of this investment. (Bijoy Biswal, page 15) ; So, it will be hovering around the same around 0.3x. (Harshdeep Singh, page 16) ; Of the equity. Now we will be maintaining that at that level. We don't want to leverage it further. So, it will be hovering around the same around (Bijoy Biswal, page 16)

Guidance & targets

EBITDA

  • Minimum EBITDA EBITDA · 2027 · High confidence INR 4,500 crores to INR 5,000 crores
    At the same time, our guided number, like we strongly believe actually the EBITDA guidance of minimum INR 4,500 crores to INR 5,000 crores is actually an achievable target for us.

    — Rajeev Nambiar

  • EBITDA per metric ton EBITDA · this year (FY26) · High confidence around INR 5,000
    I think we were targeting about INR 5,000 per metric ton for this year? If you look at it on a YTD basis, we are already INR 5,400 sort of. So yes, the INR 5,000 is quite achievable on a yearly basis.

    — Bijoy Biswal

  • EBITDA per metric ton EBITDA · FY27 · Medium confidence around INR 4,500 to INR 5,000
    I think FY27, you see our endeavor is that we should have around INR 4,500 to INR 5,000.

    — Bijoy Biswal

  • EBITDA per ton benefit from phos acid expansion EBITDA · next year · High confidence $150 per ton
    Typically, when we expand the phos acid, the spread is $150 per ton between a captive and imported phosphoric acid. So to that extent, the benefit will flow to the earning of the company for the next year.

    — Alok Saxena

  • EBITDA per ton benefit from sulphuric acid expansion EBITDA · High confidence $50
    For the sulphuric acid, the main advantage is power and also the netback, and that spread is typically $50.

    — Alok Saxena

  • EBITDA per ton improvement from 100% backward integration EBITDA · High confidence 30% to 35%
    Yes. So directionally the sustainable EBITDA per ton that we give at INR 5,000 now with one site being 100% backward integrated. When all the sites get 100% backward integrated and assuming that all other things remain same, the sustainable EBITDA per ton is likely to improve by 30% to 35%.

    — Alok Saxena

Volume

  • Total Volume Volume · this year (FY26) · High confidence four million tons plus
    Yes. So volume, see, if you look at it last year, we achieved three million tons. And this year, the guidance is four million tons plus. So that's what we are basically gearing up for it.

    — Harshdeep Singh

Capacity

  • Sulphuric acid plant commissioning (Mangalore) Capacity · end of Q4 FY26 · High confidence 300 tons capacity
    Sulphuric acid plant at Mangalore, which is on 300 tons capacity will be commissioned in the end of the Q4 FY2025-26.

    — Rajeev Nambiar

  • Phosphoric acid expansion (Paradeep) Capacity · underway · High confidence from 0.5 million to 0.7 million tons
    The phosphoric acid expansion from 0.5 million to 0.7 million is underway and the increase in phosphoric acid will enable the company to meet substantial requirement of phosphoric acid at both Goa as well as Mangalore through the excess phosphoric acid at Paradeep.

    — Rajeev Nambiar

  • Granulation capacity increase (Paradeep) Capacity · High confidence from 1.8 million to 2 million tons
    Also, we are looking debottleneck opportunity at Paradeep to increase the granulation capacity from 1.8 million to 2 million tons.

    — Rajeev Nambiar

  • Phosphoric acid capacity addition (0.2 MMTPA) Capacity · Q2 of FY27 · High confidence commissioned
    Yes. The first question is on the phosphoric acid capacity addition of 0.2 MMTPA, which is stipulated for FY27. When exactly in FY27 will this be commissioned? Q2 of FY27.

    — Rajeev Nambiar

  • Sulphuric acid addition (0.1 MMTPA Mangalore) Capacity · Q4 of this year (FY26) · High confidence commissioned
    That is this quarter, Q4 of this year, we'll commission that. (Rajeev Nambiar, page 11) ; And the 0.1 MMTPA sulphuric acid addition in the Mangalore site for FY27 will be again commissioned by when? (Gagan Thareja, page 10)

    — Rajeev Nambiar

Energy Efficiency

  • Energy improvement project completion (Goa) Energy Efficiency · last quarter of this year (Q4 FY26) · High confidence completed
    And energy improvement project at Goa is also likely to be completed by the last quarter of this year.

    — Rajeev Nambiar

Tax Rate

  • Effective tax rate Tax Rate · Medium confidence 22% to 23%
    Generally, it should be around 25%, but you are saying. Yes. See, the timing difference and permanent difference on account of the deferred tax we get actualized, we'll see that in and around 22% to 23% tax expenses.

    — Rajeev Nambiar

Capex

  • Paradeep capex commissioning Capex · March FY28 · Medium confidence around March FY28
    So tentatively, Paradeep will be around March FY28 and Mangalore would be around December FY28? That could be, yes.

    — Rajeev Nambiar

  • Mangalore capex commissioning Capex · December FY28 · Medium confidence around December FY28

    — Rajeev Nambiar

What to watch in Q4 FY26

Mangalore Sulphuric Acid Plant Commissioning

end of Q4 FY26
Current Nearing completion
Target Commissioned and operational

Why it matters

Will provide additional energy to the urea plant, mitigating the impact of expiring energy efficiency benefits and improving operational efficiency.

Sulphuric acid plant at Mangalore, which is on 300 tons capacity will be commissioned in the end of the Q4 FY2025-26.

Risks & concerns

  • Significant increase in sulphur prices

    high

    Sulphur prices have risen from INR 150-200 to INR 540-550; management made a conscious decision to build raw material inventory and expects normalization in 1-2 months.

    Management acknowledged

  • Global uncertainty, raw material price volatility, and currency volatility

    medium

    Expected to put pricing pressure in the short term, necessitating product mix optimization and manufacturing excellence.

    Management acknowledged

  • Dependency on imported raw materials

    medium

    Mitigated through strategic partnerships (e.g., OCP for rock phosphate) and ongoing backward integration projects.

    Analyst addressed

Q&A highlights

7 direct
Strategy for balancing volume growth, product mix, and margin stability under pricing pressure. Direct
Even though the current condition is actually we are under a little pricing pressure. But a lot of optimization is going back in terms of the product profitability and the portfolio, along with the manufacturing excellence, actually, we are driving that. If you look at actually our basic volumes have been shifting from low profitability product to the higher profitable product, which has been very consistently followed for this year.

Highlights management's proactive strategy to counter pricing pressure by shifting towards higher-margin products and focusing on operational efficiency.

Asked by Sucrit D. Patil

Internal indicators tracked to anticipate margin and cash flow pressures, especially regarding working capital. Direct
In fact, this 31st December closing, we had a little bit due to high raw material prices, which has moved northward in terms of sulphur and ammonia. So the working capital, the borrowing has increased a little bit due to higher investment in inventory and debtors. But what we understand that this is a position what we have taken consciously where this will get liquidated and we will have this getting back into that type of converted to cash.

Explains that increased working capital and inventory are a conscious decision due to raw material price volatility, with an expectation of future liquidation and cash conversion.

Asked by Sucrit D. Patil

Management's view on the next NBS (Nutrient Based Subsidy) revision and its trajectory. Direct
Prashant, if you see the NBS formulation as well as the current pricing, which has happened for the past six months, we expect actually NBS support to be crucial, and it is going to happen for coming. It will be difficult to tell a number, but I think it will be very positive. That's what our industry feel.

Indicates management's strong expectation of a positive NBS subsidy revision, which is crucial for the industry's profitability.

Asked by Prashant Biyani

Details and timeline for the green ammonia offtake agreement with SECI. Partial
This is a a preliminary stage and as and when it will unfold, we'll share the details. ... Agreement could be happening anytime soon. But in fact, the production and supply could be taking time. ... So maybe in next two to three years only? Yes, yes.

Reveals that while an agreement is anticipated soon, the actual production and supply of green ammonia are still 2-3 years away, indicating a long lead time for this strategic initiative.

Asked by Shubro Tripathy

Reason for inventory buildup in Q3, specifically raw material vs. finished goods. Direct
No. See, out of this increase in the inventory, mainly the increase in raw material. So that's a conscious decision that we have a price volatility as well as the rupee depreciation. Keeping all this in mind, there is a increase in the raw material stock, which is definitely going to be utilized in this quarter, upcoming quarter.

Clarifies that the inventory increase is a strategic raw material buildup to manage price and currency volatility, expected to be utilized in the near term, rather than a finished goods issue.

Asked by Dhruv Muchhal

Impact of the expiry of energy efficiency benefits at the Mangalore urea plant and how it will be mitigated. Direct
No. Right now, the impact will be around INR 3,000 to INR 4,000 per metric ton due to this energy impact changes. ... Yes, because the new sulphuric acid, which is going to come by end of this March, actually, the additional energy will be pumped back to the urea plant, where we'll have a significant saving. So this could be not fully nullified, to a large extent will be nullified.

Quantifies the potential negative impact of expiring energy benefits but also highlights the mitigating factor of the new sulphuric acid plant providing energy back to the urea plant.

Asked by Jignesh Kamani

Long-term EBITDA margin outlook post-merger and ongoing expansions. Direct
Already, we have this EBITDA margin right now is 11%. So we'll be maintaining that sort of margin.

Provides a clear statement on the expected long-term EBITDA margin, indicating stability at current levels despite ongoing strategic initiatives.

Asked by Nitin Kaushik

Current stock levels of DAP, NPK, and TSP in the channel at the end of Q3. Direct
So currently, we have got DAP stocks, which is approximately around 1,06,000 as far as channel is concerned and NPK stock of 5 lakh tons. ... TSP, we got approximately 65,000 tons of TSP stock.

Offers specific channel inventory data for key products, providing insight into market demand and supply dynamics.

Asked by Prashant Biyani

2 min read 5 chapters

Detailed narrative

Robust Q3 and 9M FY26 Performance Driven by Volume and Product Mix

Paradeep Phosphates demonstrated strong operational and financial performance in Q3 and 9M FY26. Q3 production reached 1 million tons, a 13% Y-o-Y increase, marking the second consecutive quarter at this level. For the nine-month period, production grew 15% to 2.86 million tons, and sales increased 17% to 3.37 million tons. This volume growth translated into significant financial gains, with 9M FY26 revenue up 34%, EBITDA up 45%, and PAT up 71% Y-o-Y, reflecting a successful strategy of shifting towards higher-margin NPK grades, which grew 30% YTD.

Strategic Backward Integration and Capacity Expansion Initiatives

The company is aggressively pursuing backward integration and capacity expansion to enhance earnings quality. The fifth evaporator and a 1,500 tons sulphuric acid plant at Paradeep are now fully operational. Key upcoming projects include the commissioning of a 300 tons sulphuric acid plant at Mangalore by Q4 FY26 and an energy improvement project at Goa by Q4 FY26, which is expected to reduce energy consumption by 0.3 Gcal. Additionally, phosphoric acid capacity is being expanded from 0.5 million to 0.7 million tons, and granulation capacity at Paradeep is targeted to increase from 1.8 million to 2 million tons, with a 0.2 MMTPA phosphoric acid addition expected by Q2 FY27.

Capital Allocation Focused on Growth and Efficiency

Paradeep Phosphates reported a 9M FY26 capex spend of INR 450 crores, with an estimated total of INR 500 crores for the full FY26. The company has a larger multi-year capex plan of INR 3,600 crores, including INR 800 crores for granulation, INR 800-900 crores for standalone phosphate, and INR 1,500 crores for phosphoric and sulphuric acid at Paradeep. Net debt as of December 31, 2025, stood at INR 5,450 crores, with a net debt to equity ratio of 0.75. Management is committed to maintaining debt levels and optimizing working capital through tight inventory control.

Managing Raw Material Volatility and Strategic Sourcing

The company acknowledged the impact of global uncertainty, raw material price volatility, and currency fluctuations, which are expected to exert short-term pricing pressure. Sulphur prices, for instance, have surged from INR 150-200 to INR 540-550. In response to this volatility, Paradeep Phosphates made a conscious decision to build up raw material inventory in Q3, which is expected to be utilized in the upcoming quarter. Strategic partnerships, such as with OCP for rock phosphate, are crucial for ensuring raw material security.

Optimistic Outlook on NBS Subsidy and Green Ammonia Initiative

Management expressed strong optimism regarding the upcoming NBS subsidy revision, anticipating it to be positive and crucial for the industry, supported by favorable budget allocations. In parallel, the company is pursuing a green ammonia offtake agreement with SECI for its Paradeep and Goa sites. While the agreement is in a preliminary stage and could be signed soon, the actual production and supply are projected to commence in 2-3 years, highlighting a long-term strategic move towards sustainable practices.

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