Deepak Fertilisers reports strong Q1FY25 results

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Deepak Fertilisers and Petrochemicals Corporation Ltd, a leading producer of industrial and mining chemicals and fertilizers in India, has announced its financial results for the first quarter ending June 30, 2024. Despite a slight dip in revenue, the company reported substantial improvements in profitability and margins.

The company posted ₹2,281 crore revenue, marking a marginal decline of 1.4 per cent year-on-year, due to lower commodity prices. However, the EBITDA margin improved significantly to 20.4 per cent from 12.1 per cent in the same quarter last year. Profit after tax (PAT) surged by 76 per cent y-o-y to ₹200 crore.

The chemical segment contributed approximately 57 per cent of total revenue, with a five per cent  year-on-year growth driven by increased demand in the Technical Ammonium Nitrate (TAN) business. In contrast, the fertilizers segment, which accounted for 43 per cent of the total revenue, experienced a nine per cent year-on-year decline due to a delayed monsoon, which has since improved post-July.

The reduction in key raw material prices during Q1FY25 led to lower net selling prices (NSP) for ammonia (down 36 per cent y-o-y), Muriate of Potash (MOP) (down 37 per cent), and gas (down seven per cent), resulting in improved overall margins. The company also launched the Croptek grade for soyabean crops and the Smartek grade for paddy and pulses, aiming to enhance agricultural productivity.

Mining business

The mining chemical business had an outstanding quarter with a 23 per cent year-on-year surge in TAN sales volume due to strong demand from the mining and infrastructure sectors. National coal production and steel sector production both increased by 11 per cent year-on-year. Following a demerger, the mining chemicals business will operate as a separate legal entity, offering unique technology solutions to customers in India. The demand outlook remains positive, driven by growth in coal mining, power, and infrastructure sectors.

In the industrial chemicals segment, nitric acid volumes decreased by 12 per cent due to extended repairs at the Taloja Acid plant and reduced demand from downstream industries. However, the company’s specialty pharma grade IPA continued to grow despite a planned shutdown affecting overall IPA volumes. The launch of specialty stainless steel grade nitric acid has received positive customer feedback..

The sales of manufactured bulk fertilizers reached 174 KMT, an 11 per cent increase year-on-year. Speciality fertilizer product Bensulf saw a 51 per cent increase in sales to 10 KMT. Traded speciality fertilizers experienced an 80 per cent year-on-year sales increase, with demand returning to normal levels as global prices for water-soluble fertilizers stabilised.