The Contingent liability seems to be on a higher side on a consolidated basis.Your view on this
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Mainly IT/GST demands which seemed usual from Fy23 too.
Capital commitments related to projects also seem fine to me. Infact, commitments to supplier seems to have dropped which is good sign.
1 Like
Keynote has given Target of 2132 for Deepak Fertilizers, +98% Upside
Keynote_initiating_coverage_on_Deepak_Fertilisers_and_Petrochemicals.pdf (1.7 MB)
"The company is well-positioned to drive growth in both revenue and profitability. Additionally, it will capitalize on increased capacity utilization, supported by favorable macroeconomic conditions. Strong demand, bolstered by the absence of import dumping and a growing GDP, coupled with positive monsoon forecasts, will further enhance the company’s prospects.
The global ammonia and nitric acid market is currently facing significant changes due to several key factors. Strict environmental regulations and high compliance costs are leading to the closure of ammonia production facilities across Europe, reducing regional supply. At the same time, natural gas prices are rising because of higher domestic demand and LNG exports, which is driving up production costs for ammonia producers, especially in Europe.
As a result of these developments, global prices for both ammonia and nitric acid are expected to rise, benefiting producers in regions with lower raw material costs, such as India. However, industries that rely on these chemicals, such as fertilizer and explosives manufacturers, may need help with these increased costs.
disc- invested, not buy/sell reco
15 Likes
Recent CRISIL rating A1 stable Rating Rationale
Highlights:
- Over the medium term, the operating margin should sustain at 18-20%, higher than the historical long-term average, aided by benefits from backward integration in ammonia
- DFPCL will also benefit from the lower-priced natural gas, as per its long-term contract with Equinor, priced favourably than its existing contracts
- Going forward, the group will raise additional debt to fund its capacity expansion in TAN and nitric acid, with an estimated capital expenditure (capex) of ~Rs 4,500 crore over next 2-3 fiscals
Disclaimer: Holding it in my portfolio
9 Likes
Q2 Fy25 Results
great set of no.s (driven by fertilizers, crop nutrition segment)
YoY revenue - 2,747cr Vs 2,424 cr 
13%
YoY PBT - 298 cr Vs 116 cr 156%
YoY PAT - 214 cr Vs 63 cr 237%
YoY EPS - 16.64 vs 4.76 249.58%
QoQ revenue - 2,747 cr Vs 2,281 cr 20%
QoQ PBT - 298 cr Vs 269 cr 10.7%
QoQ PAT - 214 cr Vs 200 cr 7%
QoQ EPS - 16.64 vs 15.49 7.42%
• Debt Reduction: Prepaid ₹200 crores in debt, improving the Net Debt to EBITDA ratio from 2.66x to 1.64x.
• Change in key RM Prices in Q2FY25: Ammonia ~11% YoY; MOP ▼ ~40% YoY; Gas ~9% YoY
• Mining Chemicals (Technical Ammonium Nitrate):
• In Q2 FY25, premium product LDAN’s sales volume soared by 16% YoY and rose by an impressive 20% in H1 FY25 compared to H1 FY24
• Business Outlook: The mining and infrastructure is expected to pick up post monsoon as demand for Power (Coal), Cement & Steel is expected to increase thereby providing robust support for TAN demand.
Disc invested
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Deepak Fertilizers | Q3 Highlights
a. CNB business continue to out-perform, revenue up by 55% YOY, driven by good monsoon and execution of crop focus value added strategy.
b. TAN business delivers revenue growth of 29% YOY, contributed by increase in LDAN and overall sales volume growth.
c. Management said India faced a slightly slower start to the year, but with the government’s ongoing focus on investment-led growth and strong structural drivers, we remain confident about the future of the chemical and fertilizer industries.
d. Our Q3 FY25 results reflect the strength of this confidence, highlighting the success of our strategic transition from commodity products to high-value specialty offerings, moving from customer to end consumers supported by effective backward integration and innovation
9 Likes
Why is the market punishing it? I thought the results were good.
may be due to decrease in ammonia price ?
any views from community ?
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This is a summary of the Q3 FY25 earnings call for Deeper Fertilizers and Petrochemicals Limited, as hosted by Incred Capital Wealth Portfolio Managers Private Limited.
Financial Performance:
- Deeper Fertilizers experienced a strong quarter with consolidated revenues surging by 39%, exceeding 2,500 crores.
- EBITDA increased by 72%, reaching approximately 486 crores, which is the highest in the last five years for the same quarter. EBITDA margins improved from 15% to 19%.
- Net profit surged by 318%, reaching over 250 crores.
- Operating revenues for Q3 FY25 were 2579 crore, a 39% year-over-year growth.
- The first 9 months revenue grew 15% year-over-year, reaching 7,671 crore.
- EBITDA for the first 9 months grew 70% to 1445 crore, with a margin expansion to 19%.
- Net profit for the first 9 months increased by 181% to 666 crore.
- The net profit includes a one-time tax provision reversal of 40 crore.
- The company has seen a volume growth across all products.
Key Strategies and Growth Drivers:
- Alignment with India’s growth story: The company’s three businesses (mining chemicals, crop nutrition, and industrial chemicals) are well-aligned with India’s growth in infrastructure, agriculture, and specialty chemicals.
- Operational excellence: The company has focused on improving capacity utilization (ranging from 85% to 105%), reducing downtime, and implementing smart factory initiatives.
- Capex program: The company is expanding capacities in technical ammonium nitrate and nitric acid. The company has undertaken two capacity expansion projects that are expected to go live in the second half of the coming year.
- Backward integration: The company’s investment in a world-scale ammonia plant provides a competitive edge. The new ammonia plant has a capacity of 500,000 tons, while the old plant has a capacity of around 136,000 tons. The company’s current ammonia requirements are being met by the new plant.
- Transformation from commodity to specialty: The company is focusing on R&D, market segmentation, and moving towards holistic solutions. The company aims to increase its specialty business share.
- Corporate restructuring: Each business will be housed in a separate corporate entity for enhanced focus. The demerger is complete, with all three entities now operating independently as subsidiaries of DFPCL.
Business Segment Performance:
- Mining Chemicals: Sales volumes increased by 19% year-over-year in Q3 FY25, with a 10% growth in premium products. The company expects increased demand from the coal, cement, and steel sectors.
- Industrial Chemicals: Nitric acid sales volume increased by 4% year-over-year in Q3, although there was a 3% decline over the first 9 months. IPA sales grew 36% year-over-year in Q3 and 4% over the first 9 months. The company is exploring opportunities in electronic-grade IPA.
- Crop Nutrition: Manufacturing of bulk fertilizers grew 64% year-over-year in Q3 FY25, with a 52% increase over the first 9 months. Smart and Crop tech products experienced significant growth, with volumes rising 186% and 56% year-over-year respectively. Specialty fertilizers saw an 8% year-over-year increase. The company’s focus on specialty products is helping maintain margins. The company is also seeing positive results from moving from commodity NPKs to crop-specific NPKs.
Other Key Points:
- Ammonia: The company may import ammonia for its new plants and sell excess production from the existing plant on the open market. The company currently consumes 80-85% of its ammonia production captively.
- IPA: The IPA plant is running at almost full capacity with growing demand. The company is moving towards more specialty products in IPA, such as pharma-grade and high-purity chemicals.
- LNG Supply: Supplies from Equinox are expected to start in the first quarter of FY27. This will reduce the company’s gas costs by 20% or more.
- Debt: The company’s current net debt is around 3,250 crore. It is expected to reach a peak of 5,500 crore in the second half of FY26 due to ongoing expansion projects, but is expected to decrease as the new plants become operational.
- Capacity Utilization: The company’s existing capacities are operating at a very high level, making them constrained on the supply side rather than the demand side.
- Growth Factors: In the short-term, growth is expected to be driven by selling in more profitable segments, debottlenecking existing capacities and focusing on higher margin products.
- Taxes: The last quarter’s tax rate was normal, and that is expected to continue.
Future Outlook:
- The company aims to increase its share of specialty business and expand its margin profile.
- The company is focused on moving towards more customer-centric solutions, and the company has an intent to grow its crop nutrient business by 5x.
- The company is working on a 5-year roadmap with a focus on specialty products and margin expansion.
- The company is expected to achieve further growth from capacity expansions, particularly in the second half of FY26 and in FY27 as the gas supply deal with Equinox begins.
Note:Notebooklm is used prepare the summary of audio recording of earnings call of Q3-2024-25
19 Likes
Just a few questions on the VP users tracking the company
- Russian exports of TAN were banned as they needed it for their own use during the war , and now if we see this war coming to an end in the near future how do you see the demand supply situation for TAN evolving due to this development ?
- Agrochem globally had seen overstocking after Covid-19 and have shown some initial signs of recovery , how do you see this development affecting demand-supply for TAN ?
5 Likes
Order imposing penalty passed against the wholly owned subsidiary of the Company i.e., Mahadhan AgriTech Limited.