Q1 26/27

Aug 13, 2026

Summary

Q1 sales rose 64% YoY, while fertilizer input inflation compressed segment margins. Industrial products strengthened, and FY27 fertilizer sales are budgeted above 22 lakh metric tons; projects at Sikka and Dahej remain central to growth.

Ladies and gentlemen, good day and welcome to the Gujarat State Fertilizers & Chemicals Limited Q1 FY 2027 earnings analysis call. This call is being hosted by Anurag Services LLP on behalf of GSFC Limited. Representing the management, we have Mr. S. K. Bajpai, Senior VP and CFO, alongside other senior executives. As a reminder, all participant Reliance will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star zero on your touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. S. K. Bajpai, Senior VP and CFO, GSFC Limited. Thank you. Over to you, sir. Thank you, Shruti. Good afternoon, everyone, and thank you for joining us today. On behalf of Gujarat State Fertilizers & Chemicals Limited, I welcome you to discuss our performance in quarter one, financial year 2026-27. I hope you had a chance to review the financial results, media release, and investor presentation available on the stock exchanges and also on our company's website. If we see consolidated financial performance, sales has been increased by 64% from INR 2,184 crore to INR 3,583 crore. PBT is also increased by 11% to INR 205 crore, and PAT is increased by 14% to INR 159 crore. In case of quarter-over-quarter, the sales has been increased by 36% to INR 3,583 crore. PBT is increased by 214% to INR 205 crore, and PAT is increased by 204% to INR 159 crore. Q1 2026-27 has been a strong quarter for GSFC, marked by several important milestones. We achieved our highest-ever Q1 revenue of INR 3,581 crore, driven by record Q1 fertilizer sales of INR 2,947 crore, representing Y-O-Y growth of 65% and 82% respectively. Our industrial product segment sales of INR 635 crore and EBIT of INR 116 crore were the second highest for any Q1 to date. Profit after tax increased by 15% Y-O-Y to INR 161 crore, reflecting the company's ability to deliver profitable growth despite a challenging operating environment. Our performance was supported by effective crisis management, agile operational planning, optimization of product mix, and proactive pricing actions, enabling uninterrupted operations and supply continuity amid heightened global uncertainty. Now we discuss about the fertilizer segment performance. The fertilizer segment registered a robust operating performance, with sales volume increasing 17% Y-O-Y to 5.26 lakh metric tons, supported by higher manufactured and traded DAP sales and Government of India's DAP Special Package, which helped offset international price variations. However, the quarter was also characterized by unprecedented inflation in key raw material prices arising from evolving geopolitical developments. Sulfur prices increased by 231%, ammonia by 144%, natural gas by 38%, and P2O5 by 30% on Y-O-Y basis, resulting in compression of fertilizer EBIT margin from 8.49% to 4.09%. Industrial product segment performance. It has delivered an excellent performance with 15% growth in sales and more than fourfold increase in EBIT, supported by higher caprolactam sales and significant improvement in caprolactam spread. Despite volatile global market and supply chain disruptions, the company maintained operational resilience through disciplined execution and timely business decisions. Financial position and CapEx plans. We continue to maintain a strong balance sheet with no long-term debt, healthy net worth, and adequate liquidity. GOI, Government of India's, outstanding support on release of fertilizer subsidy has kept the working capital levels at optimum levels. As of date, the company has received subsidy dues up to third week of July 2026. This provides the foundation for the company to execute our growth roadmap through strategic CapEx initiatives, including the APS capacity enhancement project and the phosphoric acid and sulphuric acid projects at Sikka, which will further strengthen our integrated operations and support sustainable long-term value creation. We talk about outlook for Quarter 2 2026-2027. Looking ahead, the revival of monsoon during July has improved the demand outlook for the agri input sector ahead of the busy season. At the same time, geopolitical developments, including the Russia-Ukraine conflict and tensions in the Middle East, continue to create uncertainty around the availability and pricing of critical raw materials and finished fertilizers. Elevated input costs, particularly for sulfur and phosphoric acid, are expected to influence industry product mix, with demand likely to remain skewed towards DAP. Against this backdrop, GSFC remains focused on optimizing its product portfolio, strengthening operational efficiencies, and maintaining prudent inventory positioning. The caprolactam benzene spread is expected to remain stable to soft in the near term amid continued volatility in crude oil prices and geopolitical uncertainties in the Middle East. This could impact feedstock mix and exert some pressure on margins across the caprolactam nylon value chain. On the demand front, melamine is expected to witness an improvement in both domestic and export markets. Export demand for AS crystal is expected to remain consistent. While domestic demand is likely to remain stable, demand across other industrial products is also expected to remain steady, providing stability to the overall segment outlook. Alright. I now turn over the call for questions and answers. Thank you. Hello, Surabhi. Yes, sir. Shall we start with the question answer? Yeah, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to answer selection questions. Ladies and gentlemen, we will wait for a moment while the questions queue assembles. The first question is from the line of Saket Kapoor from Kapoor & Company. Please proceed. Yeah. Namaskar, Baiji. Hope I am audible. Yeah. Namaskar. You are audible. Please. Yes, sir. Sir, although it is in the format that we compare year-on-year inflationary trends and profitability, but if you could give us some sense of how we exited March quarter in terms of the price trends of RM and then the consequent quarter of June. How was that shaped up? I think there are not that significant in that aspect than what it is compared on a year-on-year basis. Currently, how are things shaping up, especially for the RM basket? Yeah. Thank you, Saket. Actually, Quarter 4, if you see, it was not a normal season for the fertilizer segment. Quarter 4 last year was dull, and there is a lot of improvement in the sales as well as PBT and PAT. It is more than triple the figures. If you see the figures of the PBT and PAT, it is three times higher than the last quarter. But at the same time, raw material prices are continuing to inflate, and this is a disturbing trend as far as fertilizer segment is concerned. Sulfur prices has been now more than $1,000 a metric ton in the international prices market, and P2O5 $1,700. It is again a jump of around $350 or $340 per metric ton. Ammonia also, it is a little bit slowdown in the ammonia pricing. But other than that, natural gas again increased in Quarter 1. Actually, in Quarter 4, there was this Hormuz closure impact, and there was a panic type situation. Whatever inventory we were having, that was utilized in Quarter 4, but the raw material pricing impact actually came in the first quarter of Quarter 4. But anyhow, we have dealt with it very nicely. Whatever product we can produce which are economically viable, that we have switched over from the basket where there is negative contribution or negative margin. So the exit of Q1 RM prices you mentioned about sulfur is now up to $1,000. What was the average for our June quarter? It is around $800-$900 because if you see in the rupee term, it is around INR 82,000 per metric ton on an average in Quarter 1 because we purchased from Reliance and Nayara or wherever we are getting the sulfur. Today it is ranging around more than INR 115,000 per metric ton. It is continuously increasing. That is a very dangerous trend. We are approaching the international market also for the sulfur. If we get one or two segments at the appropriate pricing level, we are trying for that. Okay. And, sir, if you could just give us some impact of the increase in the RM prices on, say, June exit and today, how are those going to affect the margin profile for both the segments? I think so we had done 4% EBIT on the fertilizer. That is a low number, and we can understand the factors that have led to it. I think the performance from the IP was better because of the better caprolactam spread. Factoring the current inflation trend and RM prices with and also in transition to the finished one, how are margins likely to trend going ahead? As you know that in the case of urea and DAP, the government has provided the full subsidy. There is no danger of any price rise. Even if the natural gas prices increase, we get the subsidy in the urea. As far as DAP is concerned, a special package is announced by the government, in which whatever the import cost is there, we are getting 4% margin over the imported price. In case of DAP and urea, we are fully covered. Other than that, whatever fertilizers are there, that is a danger, because where the phosphoric acid is used, that gives us a real uncomfort. We are switching from product to product. We are also arranging some ammonium sulfate type product, which is not viable in India to produce. We are getting it imported from the other countries, which is reasonably good price. That is the way we are managing. Right, sir. Just concluding part. With respect to the market linked fertilizers, sir, exactly there is a demand risk to it? Definitely RM increase ad hoc or at evolved prices is a demand destruction. But when we say that it is alarming, it is alarming in respect of cost of production and the selling price, or for the demand aspect also, and we are unable to pass on the RM increase to our finished prices? Yes. This is a difficult question, but as far as my oversight goes, there is no demand problem. It is only the cost factor which is not comfortable, not for GSFC only. All the fertilizer companies who are producing NPKs and ammonium sulfate and APS type products, and mainly due to the sulfur pricing. If the sulfur pricing can be curtailed, that will be the solution. But demand, there is no demand problem as such in the market. My marketing head is sitting here. He will tell further what is the demand in case of phosphoric fertilizers. Thank you, sir. The demand destruction to some extent is definitely there. That we are seeing in the all India picture of fertilizers. Going forward, we assume that the sulfur prices will be more or less at the same level or there is a slight tightening also considered, considering the upcoming seasons and other sulfur requirements. The main thing what we impacted was the monsoon thing, the pessimistic forecast, what we have seen in both IMD and Skymet. But this situation has improved a little bit in July, and now definitely it is much more reduced. We are seeing a little bit of positivity there. That's all from my side. Okay. Sir, now with respect to, I think, the CapEx part. We had mentioned about the commissioning of that train modification for APS at Sikka unit. What is the current update on the same, and how are we going to benefit? I think it will then give us more flexibility for the product profile depending upon the market sentiment, if I'm not wrong. Yeah. Actually, there is commissioning of DAP train to be converted for continual production of APS or DAP is on schedule more or less. Within a month or 2, we will be commissioning that line. It is a temporary phase that the sulfur pricing is high. As soon as we get the source of sulfur at a reasonable level, I think APS and again, all the NPK grade of fertilizer will be produced at our Sikka unit. So we will be commissioning our line and we are simultaneously arranging and finding out the way how we can produce ammonium phosphate sulfate. DAP as such is imported, so there is no scarcity of DAP and urea. But we are finding out the way how we can produce the other phosphatic fertilizers at our Sikka unit. In the long run, we are also proposing to put a phosphoric acid sulfur unit as a project at Sikka. So the tender has already been received by us, and we will be opening the tender and finalizing it in a short time. Other than that, there are so many other projects going on. Yesterday in the board meeting, we got the approval also. But we will disclose only after the finalization of technology tie-up and the financial model. So you have to wait for 3 months. In the next quarter, I think I will be in a position to disclose much more products which are taken up by the GSFC. Okay. That is in the fertilizer segment only or the industrial chemical also? No, it is both mixed because in Dahej we have acquired as big land as in the Fertilizernagar Baroda unit. So it will be having an integrated complex like thing. It will be having some fertilizer and also the industrial product. Okay. That will be a big impetus for growth and profitability going in. Yes. Okay. Lastly, sir, when we do the peer comparison in that space, if we eliminate the urea and the DAP part of the story where we have the blessing of the government in terms of profit margins. In other NPK and the APS, which are the private players wherein we are competing? Sir, do Shree Pushkar Chemicals also have the similar product profile? If the marketing team person can apprise me on the same, we compete with them on the same product profile or they are different within our line of business? Basically, in NPK segment, we are producing ammonium phosphate sulfate 20-20-0-13 and the ammonium sulfate at the fertilizer complex. Other than that, there is one NPK grade 09-24-24 we are producing, N10 and N12. That we are importing and making it available for the farmers. But what other companies are doing and what our competition is with the other companies, I don't think that there is any demand of our product in the market. Because as such, the demand has gone down drastically because of the pricing impact on the NPK grade for fertilizers. So I don't foresee any demand threat as far as fertilizer is concerned. Actually, in Rabi season, I personally feel that we have to be ready for as much as fertilizer production or fertilizer import can be done by the company, so that there should not be any scarcity in the field in the Rabi season. Sir, I missed your comment. You are talking about lower demand or higher demand or how the demand placement is when you are saying that for the competition. I was just trying to make sense in our NPK material, who are our key competitors in the same region. I missed your point completely, sir. My marketing head will reply. Hello. Yes, sir. Tell me. Sir, particularly you will understand that in these current two months, there is an availability constraint of various fertilizers. Because most of the fertilizer companies are operating at not 100% level. That is now, I think, there is a scarcity of the product is going on. Even we are having some products limited to extent because farmers are asking that product, and they are not available in plenty. Even the phosphoric acid raw materials what we are sourcing, they are also not easily available. The demand is definitely going to be strong in the current quarter. We are also coming new season, that Rabi season is really strong in the northern states, so that will definitely gearing up for the further higher sales. But the constraint is the availability. We need government support for that, because the viability is a question. Got it, sir. So all our NPK and the APS part also are not market-driven. There are caps to the selling also, or are those market-driven? The selling. No. Most of the NPK grade of fertilizers, the MRP is more or less controlled by the producers. It is not profitable because we cannot increase the prices as per the same rate what the increase in the raw material prices. That is the main reason, because the farmers should also afford to purchase at the level where they can afford. Some other companies, they might be having some other process, so they are selling at a cheaper rate, or that is also one problem. NPK grade of fertilizers, the market pricing is open, but only the subsidy part, the government fix the subsidy per ton. That we are getting from the government. Got it, sir. Okay, sir. We will wait for Q2, and then the update on the new projects, the timelines, and all other details as alluded. All the best to the team, sir. Thank you. Thank you, sir. Thank you. Thank you, sir. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Participants who wish to ask a question, please press star and one now. The next question is from the line of Neeraj from Anvil Wealth. Please proceed. Yeah, good afternoon, sir. I have two questions. First is on the fertilizer side, like you mentioned that the MRPs are generally fixed by us and they can't be increased in tandem with the increase in the raw material cost. Just want to understand from you that the cost in terms of phosphate, sulfate, sulfur and everything have gone up. Are you getting any sense from the government in terms of increasing the subsidy portion for NPKs for the upcoming Rabi season, so that at least we can cover up the cost increases part? If you can just update on the same. Yeah, you are absolutely correct. Because every six months, government changes or announces subsidy for the next six months. If the declared subsidy will expire in September, with effect from October 1, new subsidy rates will be announced by the government. We are hoping that considering the raw material price increase, there must be some increase in the subsidy. That will solve a lot of problems for the NPK grades manufacturers. Correct. Sir, when we see our volumes, what we have clocked in Q1, any guidance you would like to give in terms of the overall volumes, what we can do for FY27? As for budget, we have, I think, more than 22 lakh metric tons. We have budgeted, and there is a good rain that started in July, and I think we will clock more than 22 lakh fertilizer sales at the end of the year. Right. This includes the trading portion also, right? Yeah. Got it. Sir, also on the fertilizer side, our sulphuric acid plant started in January 2026. On every month basis, we have seen an increase in the sulfur prices, but the sulphuric acid prices are increased on a spot basis. Has that benefit of increase in the sulphuric acid prices when we sell some portion of the sulphuric acid in the market has benefited us this quarter? If yes, if you can just help us understand that. You are right, because we have four sulphuric acid plant in GSFC. Because of the sulfur price very high, it was difficult, but still we are operating all the four plants. Because this production of sulphuric acid, we get the steam, which is required in the process for production of fertilizers and industrial products. Otherwise, we have to use natural gas from the boiler, and that steam is very costly. So we are producing all the sulphuric acid and selling at the market, even if there is not much contribution gain in the sulphuric acid sale. But it is the requirement of the company to generation of steam and to be utilized in the process. Correct. Sir, second question is on the chemical side of our business. I think from last 2-3 quarters, we have seen a stability in our profitability from the chemicals business. Just wanting to understand from you how much of this number is sustainable given the fact that the prices of most of the products, what we manufacture, are on an elevated level, and apart from us, there is virtually no producer of those products into India. If you can help us understand the chemical portion much in detail, that would be helpful. Also, our melamine production and sales was virtually nil this quarter. What was the reason for that, and how we are looking for the balance part of FY27? Yes. Actually, due to this crisis in the Middle East and Russia-Ukraine, there is a lot of volatility in the market, not only in the raw material side, but also in the chemical sector, like caprolactam, melamine and other products. Some of the products, China has banned the export. As soon as the flow of the material is stopped by China, the prices moves up. As far as caprolactam is concerned, if you see the benzene capro spread, it is ranging more than $800 presently. That is a comfortable level for the caprolactam. Our benzene prices also increased by 38%, but still there is a contribution, and we are producing the caprolactam. As far as melamine is concerned, due to the higher energy rate, 38% increase in the energy rate also. That molten urea is used in the melamine production, and that melamine production cost is not met, because a lot of Chinese cheap imports are available in India. So we have approached Government of India for anti-dumping duty or some minimum support price. Let us see how government comes out with that. Correct. Sir, last question from my side. Any update on the measures being suggested by BCG? Last time you have updated that they are working for various initiatives which could be helpful in the short term and the medium term. If you can help us understand some list of suggestions, if they have suggested to us and what could be the annual benefit coming out of these measures. Also, if you can share what is the cash on books as on June 26th. Thank you so much. Yeah. Actually, as far as the BCG assignment is concerned, it is on continuous basis for a longer period. Whatever projects we are investigating in Sikka or Dahej or some process improvement in the Vadodara complex, polymer unit and pharma unit, all the places they are making the study and they are coming with the suggestion, and after the discussion we will put the proposal to the board for approval because it requires a lot of investment. So BCG study is going on. However, we can say that yes, during the quarter, we have gained some INR 20 crore to INR 25 crore by BCG suggestions, and we have implemented those schemes in our Vadodara complex. All right. Predominantly on the chemical side, this is? No, this is an overall basis. There are so many things which might not be seen by us. They come and because they have the wider knowledge across the globe. Their expert comes to our plant and they see and help to improve the consumption norms and all this. Due to that, small scheme we are implementing and we are gaining out of it. And this number ideally should go up every quarter as those measures are getting implemented, right? Yeah. Correct, sir. Perfect. The last thing, cash on books as on June 26, including the investments, what we have in liquid funds and other government companies. Actually, due to the import of fertilizers and the lean season, quarter one. A lot of cash crunch was there across the industry because as we know, the DAP Special Package will be under the specific scheme of the government that will come after this month. A lot of cash is stuck there. And we have also procured some certain material because as per our expectation, the material prices are still increasing. So we carry the inventory so that there should not be any scarcity of the fertilizer in the rainy season. As a strategic planning, we have deployed our funds in procurement of raw materials and finished goods in the fertilizer segment. Yes, you can say there is no cash surplus in June. There was INR 500 crore borrowings at the end of the 30th June. Correct, sir. If you can share the outstanding subsidy portion, that also would be helpful. Just to understand how much it is currently blocked in terms of the subsidy portion. It is around 500 odd crore INR is outstanding. We are getting subsidy regularly from the government. That is a good time, and we are taking up as a fertilizer industry. We are taking up with the government about this cash crunch, and government is kind enough to release the subsidy timely. Because of the raw material price increase, there is a heavy subsidy burden on the government. We can understand, but we are getting the subsidy timely. Perfect, sir. Thank you so much, sir, and wish you all the best. Thank you, Nil. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Saket Kapoor from Kapoor & Company. Please proceed. Just small modification, sir. My brother who is also a shareholder, Suresh Kapoor, would like to speak on the same line. Kindly permit him, sir. Yeah. The next voice is Mr. Suresh Kapoor. Yes. Yeah, please. Hari Krishna sir, thank you for giving me this opportunity. See, sir, I wanted to know about this. Is there any buyback policy? Because our book value, keeping into account, book value is approximately near about INR 310 to INR 320. Keep into account the asset building exercise which has been done for the prolonged say 10 years or 15 years. The company is continuously building its asset. As far as market capitalization is concerned and enterprise value of the company is concerned, the enterprise value, I suppose, will be in the range of INR 5,900 crores, whereas the book value of the company will be taking into account the asset of INR 16,000 crores, which the company has INR 13,000 crores. Correct me if I'm wrong. If you can share your views, what is your buyback policy? When will be the opportune time to go for a buyback? Sir, if you can kindly share your views. No, presently, we have no such scheme in the buyback. We are focusing on the project execution and whatever the development takes place, it will be in the interest of the shareholders, and in the future years to come, by investing this heavy investment in the new projects, that return will be passed on to the shareholders in due time. Second question, sir, if you can be kind enough to answer regarding ammonium nitrate and use of that in mining industry. Because one of your peers, that is, I'm referring Deepak Fertilisers, is also a listed company. They earn from TAN, that is, technical ammonium nitrate. If you can share your view, is the company planning in this regard of developing this type of explosive products so that it can be used in mining, like companies like NMDC can also have a tie-up in that regard. If you can share your views. Just like Gujarat State Fertilizers & Chemicals is having a tie-up with NALCO. If you can please share your views. Yeah, actually, presently, we have not just TAN in our product line, or there is no proposal for producing TAN. Because already if some other company, my peer company, they are producing, then we are going for such products which is not presently produced by India. All the import substitution we are going ahead. We are not competing with the Indian company. Intention of the government tends to become self-sustained policy. "Aatmanirbhar" we are going ahead with the product producing, which is not presently produced in India, like calcium lactate. Sir, last, if you can please accommodate my last question regarding, I appreciate the effort taken by GSFC and the team of Gujarat Alkalies also by investing in GIPCL and utilizing green energy or renewable energy so as to reduce the cost of production. Now, the government is focusing on this GOBARdhan, that to utilize CBG, compressed biogas. Is the company planning in this regard to reduce its cost further? If you can kindly answer that question, please. Yeah, in that scheme, earlier we had executed somewhere in Banaras with the NDDB or somebody. But presently, I do not know what is the viability of that particular project. But presently, there is no such scheme with us under GOBARdhan production. Okay, sir. Now my brother will ask. Yeah, you may ask him. Yeah. Yes, sir. Thank you. Thank you for all the answers, sir. Yeah, it is our pleasure. Yes, I am done with the questions and that is it, sir. Thank you. Yeah. Thank you. Participants who wishes to ask a question, please press star and one now. To ask a question, please press star and one. As there are no further questions from the participant, I now hand the conference over to Mr. S. K. Bajpai from GSFC Limited. Thanks for closing comments. Over to you, sir. Thank you very much for the delightful questions, which I hope that we have answered to the satisfaction of you, Misters. Again, I thank you for joining this conference. Thank you. On behalf of GSFC Limited, I will conclude this conference. Thank you for joining us, and you may now disconnect your line.