Now while others struggle for LNG due to closure of Strait of Hormuz.
Deepak Fert will have access via Norway at a discounted price.
2 Likes
what is the source of you saying that the LNG is at a discounted price? The agreement for oil and gas purchases esp long term gas purchases are always linked to benchmark plus a premium plus freight (normally the prevailing freight rates). If you have concrete information about ādiscountedā LNG then that is very unique and huge advantage to the company.
PS: I work in oil and gas sector. No positions/holdings in Deepak Fertilizer.
1 Like
DFPCL contract is based on Brent crude + NG TTF
Brent donāt increase like TTF because we can store Crude but it is difficult to store LNG, you need to have infrastructure to store it at -160degC.
Due to this TTF prices will go up 3-4 times during crisis, but brent will go up like 50-60%.
As the contract is based on Brent + NG TTF, Deepak will get it at discounted price.
2 Likes
Poor Q4 results. Further delayed commissioning of the new plants.
Despite the rise in ammonia prices, the profitability hasnāt been translated well. Debt levels have risen.
2 Likes
1.pdf (373.0 KB)
Agreed on your observations, but we can wait for management commentary and way forward journey of the company.
1 Like
1 Like
Q1 fy27
Looks like things are falling in place as per the plan and this is clearly reflected in Q1 fy27 results. There has been a significant improvement in margins during Q1, driven by multiple initiatives such as LNG gas supply from Equinor at lower rate, lower cost of making Ammonia vs higher spot price, B2c value chain etc.
The company expects annual cost savings of around ā¹300 crore from the Equinor gas contract. LNG contract should significantly reduce ammonia production costs compared to the current spot price (around $600).
Management is expecting the completion of gopalpur TAN and dahej Nitric Acid plants by Q2 and the capcity utilization of 80% by Q4. If achieved, the company should be able to deliver annual revenue of ā¹12,000ā14,000 cr with an ebitda margin in the range of around 20%.
@r8b8 The acquisition of Chardham Chemicals was not on your list of possible takeover candidates. Do you think this company can provide all the critical inputs required for Platinum Blasting Services, perhaps in a way similar to Regenesis Industries?
Also, how do you see the mining/blasting solutions business evolving from here?
Disc - invested and highly biased.
2 Likes
Chambal Fert.pdf (260.2 KB)
1 Like
The massive capital expenditure program of roughly ā¹4,650 crore, centered on two mega-projects: the Gopalpur Technical Ammonium Nitrate (TAN) project in Odisha and the Nitric Acid expansion complex in Dahej behoves well. These projects faced multiple timeline postponements and cost revisions (with Gopalpurās outlays rising to ā¹2,675 crore) driven by logistical bottlenecks, port ownership changes, and additional environmental/effluent compliance
The multiple timeline postponements and cost revisions (with Gopalpurās outlays rising to ā¹2,675 crore) driven by logistical bottlenecks, port ownership changes, and additional environmental/effluent compliance requirements have caused Cost Overruns / Capital Cost Escalation.
The impacts was Feedstock and Import Vulnerability During the extended construction and pre-commissioning phases, DFPCL experienced compressed return metrics and higher net debt-to-EBITDA leverage while carrying heavy capital work-in-progress (CWIP).
Consequent to the delay, DFPCL had to temporarily rely more heavily on exrnal market sourcing and spot price volatility for intermediate chemicals.Now. as these delayed facilities finally approach full commercial operations, the prolonged pain of debt-funded deployment may shift toward an earnings inflection phase, proving how critical timely rollout is for realizing projected ā¹2,500 crore top-line additions.
We can expect management to raise more capital to fund the many projects. To fund the newly separated TAN business (DMSPL), and the commissioning of production facilities, such as the Gopalpur Technical Ammonium Nitrate facility and the Dahej Nitric Acid expansion. Necessary to reach stable, scaled capacity at these plants and giving each subsidiary the independent balance sheet strength which is necessary to attract better external public market valuations. .
We should expect a direct public listing demerger advantage (issuing shares directly to existing DFPCL investors) or a standalone Initial Public Offering (IPO).
1 Like