DEEPAKFERTNSEQ4 FY 2025May 23, 2025

Deepak Fertilizers and Petrochemicals Corporation Limited

7,895words
120turns
10analyst exchanges
4executives
Management on call
Sailesh Mehta
CHAIRMAN AND MANAGING DIRECTOR, DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED
Suparas Jain
EXECUTIVE VICE PRESIDENT, CORPORATE FINANCE, DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED
Debasish Kedia
SENIOR GM, CORPORATE FINANCE, DEEPAK FERTILISERS AND PETROCHEMICALS CORPORATION LIMITED
Harmish Desai
PHILLIPCAPITAL (INDIA) PRIVATE LIMITED
Key numbers — 40 extracted
28%
side at the outset in terms of the headlines, I am indeed happy to share that Q4 top line grew by 28% and PAT bottom line grew by 21%. For the full year, the top line grew by 18%, and we crossed INR
21%
he headlines, I am indeed happy to share that Q4 top line grew by 28% and PAT bottom line grew by 21%. For the full year, the top line grew by 18%, and we crossed INR 10,000 crores. But the headline
18%
Q4 top line grew by 28% and PAT bottom line grew by 21%. For the full year, the top line grew by 18%, and we crossed INR 10,000 crores. But the headline there is that PAT bottom line grew by 102%. I
INR 10,000 crore
28% and PAT bottom line grew by 21%. For the full year, the top line grew by 18%, and we crossed INR 10,000 crores. But the headline there is that PAT bottom line grew by 102%. It’s almost doubled. Based on thes
102%
by 18%, and we crossed INR 10,000 crores. But the headline there is that PAT bottom line grew by 102%. It’s almost doubled. Based on these good results and also balancing it out with the CAPEX plan,
100%
ht was to look at even higher dividends, but the Board in a conservative manner has recommended 100% dividend. So now just to share some insights in terms of when I look at the year as a whole to lo
22%
give us a very positive traction. With the push that we have, overall, we are seeing that almost 22% of our revenues are now emerging out of this move into the specialty space. The key contributor
rs,
agri produce, which is where we are now having a very positive traction in terms of repeat customers, and a very strong attraction also from the channel. And uniquely, now we have clocked up not jus
58%
d that is what is bringing the strength. Similarly, in the acids, again, every segment right from 58% acid, 60% acid, 72% acid, right up to 98% acid is something that we are catering to, and going up
60%
what is bringing the strength. Similarly, in the acids, again, every segment right from 58% acid, 60% acid, 72% acid, right up to 98% acid is something that we are catering to, and going up to even
72%
inging the strength. Similarly, in the acids, again, every segment right from 58% acid, 60% acid, 72% acid, right up to 98% acid is something that we are catering to, and going up to even specialized
98%
imilarly, in the acids, again, every segment right from 58% acid, 60% acid, 72% acid, right up to 98% acid is something that we are catering to, and going up to even specialized acid with additives f
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Guidance — 20 items
Sailesh Mehta
opening
“And going forward, as we move more and more towards segmenting the market and catering to each segment, and as we move more and more from pure commodity product offering to a holistic solution offering, we are seeing that not only there will be, I would say, additions to the contribution margin, but we are on our way to creating valuable brands in the spaces that we are performing, in the spaces that we are having our business focus.”
Sailesh Mehta
opening
“So as we look at this aspect, we were also, from a project perspective, seeing that some, I would say, competition could be emerging.”
Sailesh Mehta
opening
“And when we looked at ourselves, we saw unique USPs against competition that we will be bringing to the table.”
Sailesh Mehta
opening
“Uniquely, our facilities will be now on both East Coast and West Coast, and that will provide a freight advantage to us as we serve our customers.”
Sailesh Mehta
opening
“With having multiple facilities in terms of our technical ammonium nitrate and our nitric acids, we will be singularly placed to provide 100% assured supplies to our customers, which others may not be able to.”
Sailesh Mehta
opening
“With the 40 years of knowledge and experience in the market, uniquely, we will be bringing in a huge supply chain advantage of warehouses, dealers, and others to be able to cater to these customers.”
Sailesh Mehta
opening
“And of course, the 40 years of knowledge and experience will be uniquely standing on our side, whether it is in terms of raw material availability, operations, safety, health environment, logistics, so on and so forth.”
Sailesh Mehta
opening
“So, this kind of a complete value chain is something, which will be very, very unique to the Deepak Fertilisers Group.”
Sailesh Mehta
opening
“And finally, when we move right up to the requirements of the end consumer, whether it’s the farmer or the mine, this is something where this strength right from LNG to the final finished impactful product plus solutions is something that in the next 2 years to 3 years will be something that will be uniquely available from Deepak Fertilisers and its subsidiaries, unlike anyone else.”
Subhash Anand
opening
“Looking ahead, we are optimistic for the kharif season, supported by forecast of above normal monsoon and our targeted approach across cotton, soybean, paddy, and corn through the Mahadhan brand.”
Risks & concerns — 11 flagged
TAN volume in Q4 grew 13% sequentially to 146 Kt, though Y-o-Y, we have seen a 3% decline.
— Subhash Anand
On Industrial Chemicals, despite a volatile global environment, this segment saw a solid performance.
— Subhash Anand
Talking about outlook, nitric acid remains well positioned with improving downstream demand from TAN, while IPA faces some near-term margin pressures due to oversupply and weak Acetone prices, our specialty product line is gaining steady market traction and positive customer feedback.
— Subhash Anand
So, is there a challenge in terms of the placement of the additional volume in the next 1, 2 years before the actual long-term growth in the downstream end-use sectors is able to absorb the incremental capacity?
— R. Sankaranarayanan
So, we don’t see a challenge in the TAN demand.
— Subhash Anand
We don’t see a challenge placing our capacity in the market.
— Subhash Anand
It’s becoming a bit of a challenge to understand exactly the spread levels.
— Nikhil Gada
Last quarter, specifically, the dip in industrial chemical or dip in Chemical business segment is IPA is one thing, which has impacted, because there is a pressure of IPA prices globally, and that has impacted marginal Industrial Chemical business.
— Subhash Anand
Current year, demand side, we don’t see a challenge.
— Subhash Anand
So, nitric acid as a total business, we have not seen a challenge placing our nitric acid.
— Subhash Anand
So, we don’t see an immediate impact of one of the specific segments seeing a softness of nitric softness.
— Subhash Anand
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Q&A — 10 exchanges
Q
Hi, sir. Thanks for this opportunity. So, my first question is, what is the current ammonia pricing and what was your annual savings in FY ‘25 from the ammonia plant?
Subhash Anand
Okay. In fact, the current price of ammonia is around $300. Yes, the last quarter, I will say the average price is around $330. That’s what the average number what we have seen. I will not say saving in terms of ammonia, we need to see separately because now we have an integrated supply chain. As we continue to maintain, our EBITDA breakeven is around $310, $320, at that price, the PCL remain EBITDA breakeven. Okay. And sir, what would be our EBITDA from our Industrial Chemicals business and the Fertilizers business, if you could specify? So, we don’t give segment-wise EBITDA margin, this thin
Q
Congratulations on the results. So in terms of the 2 housekeeping questions I have, one is your other expenses have gone up, both on a Y-o-Y and quarter-on-quarter basis in the consolidated results. And secondly, in the segment results, your Chemical business segment earnings is down, both again on Y-o-Y and quarter-on-quarter basis. Is that because of the IPA shutdown or any other reason for that?
Subhash Anand
You’re talking quarter, right? For the 4th Quarter, yes. Yes. In fact, Industrial Chemicals, yes, we have an IPA shutdown and that has an impact on our profitability. And in terms of the increase in other expenses? In fact, since the majority of the growth has come from CNB business, and that has a very high freight output, so that’s the impact what you see in our other expenses. Is that seasonal? Or is it something, which will continue depending on the growth in your Fertilizer business? It’s a business specific. CNB growing will always see freight expenses going up, higher compared to other
Q
Yes. Hi thanks for the opportunity and congrats on a good set of numbers. Sir, just a continuation on this overall TAN growth. Just for the 4th Quarter as well as for the last 3 years, if we see the growth in our TAN volumes, it has been sort of suboptimal. It’s been around 1% to 2% range. And while we are talking about a capacity of close to 6 lakhs, we have still not been able to achieve, at least closer to those kind of levels. So is it because of there being a demand being slower? Or is it something where we are capacity constrained in terms of our nitric acid, which you have mentioned, th
Subhash Anand
No, Nikhil, you are right. There’s no demand constraint actually. We do have a demand, and we are at this point of time constrained by supply side. We have a nitric acid capacity constraint, and that’s a limiting factor for us to grow our TAN substantially. And that’s one of the main reasons for us to get into capacity and expansions and then cater to the demand, which we already know we have in front of us. Second thing, if you see what is immediate, we have done some debottleneck of TAN business, TAN capacity and nitric acid capacity last year towards end of H1 or beginning H2. So, that will
Q
Sure. I will do that.
Management
Q
Yes. I hope Sailesh bhai is on the call because in his initial remarks, he made a comment that there was a certain valuation assigned to the Mining Chemical business, which represented the bulk of the value of the firm. And he was expressing wonderment as to why that is the case. So, I hope Sailesh bhai is on the call.
Subhash Anand
No. Bharat bhai, keep asking, I should be able to answer your questions. Okay. Because he raised the question, I thought he’ll be there to discuss that question that he had raised. But be it as it may, I will reach out to him separately. Subhash ji, if we continue to play coy, and not give proper details of each business in terms of underlying moving parts, its profitability, when the change of the traction over a period of time, how do you expect really speaking for people to be able to analyze the business, which has 3 main activities? And each activity has many moving parts. And therefore,
Q
Congratulations on good set of numbers, sir. I have few questions. First is regarding the Ammonia business, wherein you used to mention that about $380 per ton would be breakeven cost for you. But I suppose that you usually produce ammonia from natural gas, use about 33, 35 MMBtu of natural gas for that. And given the fact that the natural gas prices have fallen down significantly from Q3 to Q4, because of Brent-linked and Henry Hub linked contract. So what is the current cost of gas that you are accumulating right now due to which you would have, again, shifted your breakeven cost from $380 t
Subhash Anand
No. In fact, $380 I don’t think so we ever talked $380 in dollars. We always maintain for EBITDA breakeven, our number is around $310 to $320. So, we broadly remain at that level for EBITDA breakeven. Second thing, you are talking about gas. Currently, our gas prices are more I will say since our long-term Equinor contract yet to get kicked in and that will get kicked in only next year, FY ‘26, and that’s where we will start seeing the real benefit of gas price reduction happening. Till that time, our contracts are linked to various baskets, not just one Brent or not just one thing. Movement o
Q
Sure. Sure.
Management
Q
Just a couple of questions, rather bookkeeping. You said for TAN, is the license capacity 587 Kt or 630 Kt?
Subhash Anand
It’s 587. TAN capacity you are taking. Right. Okay. Got it. Second, how big is LDAN for you? And what is the significance of the B2C metric that you laid out in the presentation? Okay. No, in fact, the LDAN is basically a product, which gets used as an explosive in the mines or in infrastructure. So, we used to sell most of our product as a B2B segment of late. As a part of our TCO, we started working with end consumers, which is various mines and infra and started working with them to supply LDAN directly to them. And that’s how our downstream business or a B2C journey in TAN is expanding. An
Q
These are just objective one liner questions that I am asking. Just give me a couple more and then I will get back on the line. So sir, on CAPEX, if you could give us your overall CAPEX for FY ‘26 and ‘27, the maintenance CAPEX within that? And last, for Gopalpur and Dahej, what has been the CAPEX outlay till March ‘26 for ‘25? And what is the likely outlay in ‘26 and ‘27? Thanks, that’s it from me.
Subhash Anand
Okay. In fact, the total CAPEX this year, which we talked about FY ‘26, the 2 new projects, total CAPEX is expected to be around INR 4,500 crores, total I am talking. Out of that, our capitalization is around INR 1,400 crores. That’s what we already completed. So, balance is expected in the current year. So, INR 3,100 crores in FY ‘26, all of it? Because we have to complete the project. So, this is the CAPEX of this year expected. And for your footprint, what is the maintenance CAPEX that you run with? That’s roughly around, I would say INR 300 crores to INR 400 crores. That’s the normal maint
Q
Thanks. Thank you once again for your time and interest in Deepak Fertilisers and Petrochemicals Corporation Limited. We appreciate your continued support, and look forward to engaging with you in the next quarter. Thank you.
Management
Speaking time
Subhash Anand
50
Bharat Shah
18
Moderator
12
Tarang Agrawal
11
R. Sankaranarayanan
8
Nikhil Gada
8
Pratyush Kamal
6
Jainam Ghelani
5
Harmish Desai
1
Sailesh Mehta
1
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Opening remarks
Harmish Desai
Thank you, Avirath. Good evening, and welcome to the 4th Quarter and Full-Year FY ‘25 Earnings Call of Deepak Fertilisers and Petrochemicals Limited, hosted by PhillipCapital. From the Management, we have Mr. Sailesh Mehta – Chairman and Managing Director; Mr. Subhash Anand – President and Chief Financial Officer; Mr. Suparas Jain – Executive VP (Corporate Finance); and Mr. Debasish Kedia – Senior GM (Corporate Finance). I would like to thank the Management for giving us the opportunity to host this call. We will begin the call with Opening Remarks from Mr. Sailesh Mehta, followed by Mr. Subhash Anand for an update on financial performance, post which we will have a Q&A session. Thank you. And over to you, sir.
Sailesh Mehta
Okay. Thank you. So, a very warm welcome to all of you for the Q4 and 12-month FY ‘25 earnings call. I do hope all of you had a chance to review the presentations. But just from my side at the outset in terms of the headlines, I am indeed happy to share that Q4 top line grew by 28% and PAT bottom line grew by 21%. For the full year, the top line grew by 18%, and we crossed INR 10,000 crores. But the headline there is that PAT bottom line grew by 102%. It’s almost doubled. Based on these good results and also balancing it out with the CAPEX plan, though the thought was to look at even higher dividends, but the Board in a conservative manner has recommended 100% dividend. So now just to share some insights in terms of when I look at the year as a whole to look at the undercurrents and to try and share with you in terms of what we feel is panning out, what has worked. So somewhere, I see very clearly that strategy and execution coming together now and getting validated, revalidated in the
Subhash Anand
Yes. Thank you, Mr. Mehta, and good evening, everyone. It’s a pleasure to welcome you all to Deepak Fertilisers and Petrochemicals Corporation Limited earnings call for the 4th Quarter and full-year financial, year ended 31 March 2025. We are pleased to report yet another quarter and year of strong performance, marked by resilient operations, robust financials, and continued progress on our strategic transformation journey. Let me start with financial highlights. Revenue for quarter 4, operating revenue stood at INR 2,667 crores, a strong 28% increase Y-o-Y, primarily led by our CNB business, which grew by 86%. The full-year FY ‘25, we reported INR 10,274 crores in revenue. That’s an 18% growth over FY ‘24. Notably, our specialty product portfolio now contributes 22% of our total revenue, led by our crop-specific innovations and our premium LDAN product. On EBITDA front, Q4 EBITDA came in at INR 480 crores, up 10% Y-o-Y. While the margin for quarter stood at 18%, slightly lower due to
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