Asked two questions in today’s concall - one on the usage of drones and one on Nano Urea, You can listen to the answer from 1:02:15 onwards:
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Fail to understand why Deepak fertilizer is hitting 52 week high but Chambal is going down and down. Ukraine war was supposed to benefit fertilizer companies… no?
This is mainly because of the Government’s hike in its share for subsidy for di-ammonia phosphate (DAP) by 140 per cent.
Very bad results…
Net profit for the period declined 45 percent to Rs 274.27 crore compared to Rs 506 crore during the year-ago quarter.
The drop in net profit is despite sales nearly doubling for the quarter to Rs 8,587 crore.
Chambal Fertilisers said that it suffered a one-time margin loss of Rs 237 crore on phosphatic and potassic (P&K) fertilisers during the quarter due to a substantial increase in prices of imported fertilisers and adverse movement in USD‐INR exchange rate that could not be passed on to the market.
A lag in subsidy payments, leading to working capital pressures, also contributed to the loss.
Operationally, the company’s EBITDA declined 40 percent to Rs 445 crore from Rs 738 crore year-on-year while margin saw erosion of over 11 percentage points to just 5.2 percent from 16.5 percent.
Additionally, the company’s board also approved a revision in the capacity and estimated cost of the company’s Technical Ammonium Nitrate Project.
The capacity of the plant for manufacturing Technical Ammonium Nitrate has now been revised from approximately 2.2 lakh MTPA to 2.4 lakh MTPA. The estimated project cost has also been revised higher from approximately Rs 1,170 crore to Rs 1,645 crore.
The project is estimated to be completed in the next 34 months, with its implementation subject to necessary statutory and other approvals.
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High volume breakout in this counter to ATH. anyone following up on the fundamentals?
Disc: Tracking
CHAMBAL FERTILISER; UPDATE ON L&T ORDER
Company has now entered into an amendment to the Contract
Contract price revised from ₹960.71 Cr to ₹992.71 Cr (tax excluded); project cost unchanged at ₹1,645 Cr. Completion extended to 19 Jan 2026.
How positive is this ?
TAN opportunity is huge…revenues will kick in from 4th quarter fy26…might convert it from cyclical to structural long term story…just like deepak fertilizers…might be a good bet to take at 13 pe.
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can you help enumerate the potential. ALso what is outlook for TAN as a whole in terms of opportunity, is it an import driven substitution.
Close to 5000 crores is market size in 2024…almost 75% is imported…russia is the biggest supplier…market size expected to double by 2030…this is almost 1/4th the mcap of chambal fertilizers…deepak fertilizers has started to produce and supply domestically…chambal’s tan plant will come soon by q4…even coal india is putting capacities in this.
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cc586b5e-b21e-4fa6-9b2b-942f8b549bfd.pdf (363.2 KB)
Page 13 of 15 Q3’FY26 Transcripts:
Q : One question on the demand-supply dynamics in the TAN market. There were some recent reports about CIL also wanting to set up its own manufacturing facility. So, could you just talk a little bit more about your thinking about the market?
A : it is an expanding market. Let me tell you, we are anyways growing in the market, I think around 5% to 6% CAGR, and that you can recheck from Deepak as well. And the market will shortly become long, in the sense that there will be some capacities added by us, by even Gopalpur at Deepak and so on, in the next one or two years.
But overall, if you see the trajectory of what is going to happen in India, infrastructure, data centers, copper, cement, requirement of power through coal, and so on, I am pretty confident that the trajectory is going to go higher. Secondly, the other trigger that we think is going to happen is the private sector involvement in mining, especially metals and so on. This is going to open up big way in the next 3-4 years. That is a real opportunity because there will be requirement for specific stuff there, which is why we talked about some kind of vertical integration into this. Then, that, in any case, doing vertical integration insulates us to some extent.
The second part is that we have heard about CIL and BHEL. Coal technology definitely gives lot of advantages in terms of ammonia manufacture, but it is a difficult technology to master, and it is very emission intensive. We have a lot of respect for Coal India and BHEL, but by their own admission, they are talking about 4 years from now. So, we are looking at a space where the market is already going to go long, and that point of time, I think we will have enough space for everybody around, I think, to tackle this issue. We are quite confident.
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Good results; both promoters & DIIs are increasing stake (ICICI Prudential is buying it on dips); however, the 8-year period for the applicability of NIP-2012 for G-3 is expiring in December 2026, the market might be waiting for its outcome
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Chambal Update.pdf (259.7 KB)
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Promoters have continued to buy from the market since the day the results were published.
Good to see that the industrial chemicals division have started production with weak nitric acid. Ammonium Nitrate solution and HDAN will follow. The company expects a 75 to 80 % capacity utilization for the new facility.
Working capital requirements should increase due to higher gas prices.
There may be some temporary cash mismatches due to a sudden increase in gas prices.
The company is also waiting up for the new policy on Urea for the G3 plant from December.
The company is trying to introduce new products in the markets like Crop protection chemicals, Biologicals and nutrients.
If the company can use its extensive marketing and distribution channel to grow this segment, it can add an addl layer of profitability. The company has plans to introduce more products in the coming year.
The company may go for a 4th Urea plant.
Investment for another plant could be closer to 10000 crores
Even with the large capex TAN project, the company has very little long term borrowings and short term borrowing well covered by receivables
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I am surprised at the decision to invest Rs.10,000 crore in another Urea plant. The TAN initiative had raised hopes that the company was finally moving away from subsidy driven urea business to something better. I am sure there are many attractive adjacencies the promoters can find to invest in if they want to. And the financial profile of the company remains strong. It is puzzling why they need to go for another Urea plant. Maybe they have an inkling of the new policy that is coming, maybe it is more attractive than the existing 2012 one, but still market will never give a good valuation to such a business. I am holding some, and thankfully I have not added anything for more than a year now. Was waiting for TAN to commercialize, but now this throws cold water on any expectations one may have from Chambal.
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Even if government gives go ahead now even to start it will be 6 months and from there minimum three years they are pushing it to make the government announce a more attractive new urea policy because gadepan 3 subsidy plan is over by dec 26
So if they get a attractive gas fixation they can maintain the same urea ebidta of 2000 cr cash cow that is thought process now they are very effective low cost producers of urea in global level
So nothing to be scary
See 2000 cr ebita in urea 300 to 350 from cpc 150 from trading tan plant this Yr arount atleast 75 to 100 cr next Yr full
Ocf of 2000 cr see bajel confirmed he received the subsidy pending and he is surplus cash at the time of concall
Market Cap of 18000 cr with 7 rupee dividend and cash yield of more than 8 to 9 no debt after a heavy Capex fully interst free
Don’t worry sir u can enjoy 25000 cr Market cap or atleast 550 sounds good with 7 rupees in this expensive Market of u have company with real asset
So I think it is sleep well night stock
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Chambal is transforming from a subsidy-driven urea company into a diversified agri-input and industrial chemicals platform, with TAN emerging as the next major growth engine while the G-3 policy decision remains the key monitorable.
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FY27: TAN-led earnings upgrade year.
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FY28–FY29: Potential fourth urea plant and specialty business scaling.
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Favorable resolution of the G-3 subsidy framework.
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Biggest risk: Unfavorable post-December 2026 NIP treatment.
My thesis is
Even with NIP fixing g3 at a unfavourable side ( which in present position seems unlikely GOI may stick to the same ) which may offset by the pice increase as per ipp urea price mr Bajel concall reply.
see today urea ebitda is around 2000 cr and in time the depreciation will be lower only maintenance capex around may be 100 cr if the worst case scenario this could be 1800 to 1700 on EBITDA basis which in turn can give a base market cap at 12000 to 14000 cr so at the normal cash yield will be hovering around 10 percent
The cps growing at 20 percent with an ebita margin should be getting atleast 15 ev so 5000 base market cap the trading may be around 1500 cr
Tan should yield around 2000 cr market cap
Net cash strong balnce sheet with net worth around 12000 cr and good ocf and fcf
All iam saying is a base market cap 20000 cr seems reasonable with 7 to 10 rupees dividend barring monsoons and subsidy delay
So in this overhyped 40 pe 50 pe hyped situation we are getting as asset backed company with a reasonable cash yield and no debt capex over and a quality mangement
Iam may be biased because holding
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