Conference Call with Deepak Fertilisers & Petrochemicals Management and Analysts on Q1FY25 Performance and Outlook. Listen to the full earnings transcript.
Commodity Chemicals company Deepak Fertilisers & Petrochemicals Corporation announced Q1FY25 results: Revenue delivered was Rs 2,281 crore, marginal decline by 1.4% on YoY basis due to lower commodity prices. EBITDA margin improved to 20.4% against 12.1% on YoY basis. PAT was Rs 200 crore which is 76% higher on YoY basis. Segment Performance: Chemical Segment (Mining and Industrial Chemical) contributed about 57% of total revenue which grew by 5% YoY mainly driven by improved demand in TAN business. Fertilisers Segment contributed 43% of total revenue which was lower by 9% YoY because of delay in monsoon which post July has picked up very well. Commenting on the performance, Sailesh C. Mehta, Chairman & Managing Director: DFPCL has delivered an impressive performance for Q1FY25, with notable increase in EBITDA margin by 823 bps YoY, up from 12.1% to 20.4%. The businesses are reaping the benefits of backward integration of Ammonia plant which has helped mitigate supply chain risk as well as price volatility and the benefits are captured within the group. Also, the strategy of moving from commodity to speciality has been working to sustain and enhance the margins of the businesses. Hon'ble National Company Law Tribunal (NCLT), Mumbai, has approved demerger plan for the Mining Chemicals and Crop Nutrition businesses. This strategic restructuring is a step towards achieving our vision of transitioning from Commodity to Specialty and moving from Customer to Consumer by providing holistic solutions, driven by specific business strategy, market leadership, technology and operational focus. Further, as indicated by the national budget and the government’s continued focus on critical sectors such as agriculture, power, mining, and infrastructure, which is promising for the company from both short-term and long-term perspectives. We continue to maintain sharp focus on operational efficiences, drive cost optimizations, capacity utilization, and productivity improvements, which will help us navigate through market challenges and remain steadfast in adding value to our shareholders. Result PDF
Commodity Chemicals company Deepak Fertilisers & Petrochemicals Corporation announced Q4FY24 & FY24 results: Revenue Growth: During Q4FY24, revenues grew by 12.6% QoQ basis. For FY24, the company reported consolidated operating revenue of Rs 8,676 crore. EBITDA margin improvement: As the Raw Materials and the Finished products prices came down from the post Covid peaks, the revenue/top-lines receded. However, the overall EBITDA margins of the quarter rose from 16.8% to 21% and the annual margins were lower only thanks to the large one-time subsidy adjustment. The improving trend is also apparent from the Q3FY24 to Q4FY24 margins showing smart upswings of 576 bps reaching 21% EBITDA margins versus 15.2%. Segment Performance: FY24 Chemicals Segment revenues de-grew by 25% YoY with sustainable segment margins of 26%. FY24 Fertilisers Segment revenues dropped by 21% YoY, segment margins were impacted on account of one-time subsidy of 267 crore and weak monsoon. Reduction in key RM Prices during FY24 has resulted in lower NSP: Ammonia down by ~46% YoY; Phos Acid down by ~37% YoY; RGP down by ~15% YoY; MOP down by ~25%, Gas down by ~22% Net Debt of Rs 3,426 crore with Net Debt / Equity of 0.63x (FY22: 0.48x), increased due to long term project debt and working capital needs. Ammonia project commissioned in Aug 23, has achieved 100% designed production capacity. CRISIL has recently assigned a ‘Short Term’ Credit Rating of A1+ to DFPCL and MAL (Highest rating). ICRA has reaffirmed DFPCL & MAL ‘Long Term’ Credit Rating to AAwith Stable outlook and ‘Short Term’ Credit Rating is also reaffirmed to A1+ (Highest Rating). Promoters Pledge: As of March 31st, 2024, there is no encumbrance of any kind on Promoter’s holding, ensuring stakeholders' confidence in the company's strong financial position. Dividend: The Board has recommended a dividend of Rs 8.5/- per equity share of Rs 10/- each (85%). Commenting on the performance, Sailesh C. Mehta, Chairman & Managing Director: The company has shown resilience and strategic focus despite the Chemical and Fertilisers segment facing challenges simultaneously. Short-term aberration in the import of fertilizer-grade ammonium nitrate from Russia, low cost Nitroaromatics from China and below normal rainfall in our core markets impacted business performance. Despite the odds the company has delivered healthy performance with sustained margins, driven by innovation, operational excellence, and sustainability. We have entered into a 15-year long-term gas supply agreement with Equinor, commencing in May 2026. This move will ensure continuous supplies of Natural Gas and is expected to improve margins through effective natural gas/LNG hedging and in-house ammonia production, ensuring greater stability. We also signed a Commercial agreement with Haifa Group, a renowned multinational corporation specializing in Specialty Crop Nutrient. The MAL-Haifa offerings will support agricultural practices that counter the vicious trend of water scarcity and also enhance Nutrient Uptake & Use Efficiency in the plants. This will directly help achieve our Prime Minster’s dream of “More Crop Per Drop”. For FY 24-25, the demand outlook for all our business segments looks positive. ‘IMD’ has forecasted above average normal rainfall in FY25, expecting a good Kharif and Rabi season this year. Mining Chemical business volume growth is expected to continue in FY25. Further, the business has demonstrated capability to deliver Total Cost of Ownership (TCO) projects across mining & infrastructure end-users customers and is in process to become a holistic mining solutions provider in India. This will help sustain margins and customer stickiness. As we navigate through evolving market dynamics, we remain steadfast in our commitment to creating long-term value for our stakeholders while upholding the highest standards of corporate governance and sustainability. Result PDF
