Q2 25/26

Nov 12, 2025

Summary

Q2 revenue rose 21% YoY and PAT 9%, led by fertilizer sales and a turnaround in industrial products. Raw-material inflation pressured fertilizer EBIT; rabi demand is expected to remain healthy, with Sulphuric Acid V commissioning ahead.

Ladies and gentlemen, good day and welcome to the Gujarat State Fertilizers & Chemicals Limited conference call for Q2 FY26 earnings. This conference call is being hosted by Anurag Services LLP on behalf of GSFC Limited. From the management, we have Mr. S.K. Bajpai, Senior VP, Finance and Legal and CFO, Mr. S.V. Varma, Executive Director, Agri Business, HRS & IR, and other senior members from the management. As a reminder, all participant lines will be in the 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 then zero on your touch-tone phone. I now hand the conference over to Mr. S.K. Bajpai, Senior VP, Finance and Legal and CFO, GSFC Limited. Thank you, and over to you, sir. Thank you. Good afternoon, everyone. Thank you for joining us for Quarter 2 2025-2026 earnings call of Gujarat State Fertilizers & Chemicals Limited. It's always great to connect with all of you and share the key updates that we have from the quarter. I'm hoping 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 you see consolidated financial performance on YOY, this is Quarter 2. Revenue from operation expanded by 21% YOY from INR 2,635 crore to INR 3,187 crore. PBT rose by 11% YOY from INR 387 crore to INR 428 crore and PAT by 9% from INR 298 crore to INR 324 crore. If you see half-year results YOY, revenue from operation grew by 12%, from INR 4,798 crore to INR 5,372 crore. PBT rose by 23%, from INR 500 crore to INR 613 crore, and PAT rose by 20%, from INR 386 crore to INR 463 crore. Now if we look quarter over quarter, then being the high season, fertilizer season, revenue from operation grew by 46%, from INR 2,184 crore to INR 3,187 crore. PBT jumped by 132%, from INR 184 crore to INR 428 crore, and PAT by 134%, from INR 139 crore to INR 324 crore. I think you have also seen these results published, and I am not repeating the numbers on a stand-alone basis. But it is more or less similar because consolidation and stand-alone, there is not much difference. The company commenced the second quarter of current financial year with its strongest ever performance, registering total sales of INR 3,140 crore, up 20% on year-over-year basis, and profit after tax of INR 320 crore, marking 6% improvement over the corresponding period last year. The fertilizer business, which saw a 21% gain in revenue and increased sales volume from 5.47 lakh metric ton to 6.08 lakh metric ton, including significant DAP trading, was the main driver of growth. However, due to sharp rises in the cost of imported raw materials like phosphoric acid by 20%, sulfuric acid by 123%, and sulfur by 150%, EBIT moderated to INR 224 crore from INR 257 crore, offsetting the advantage of increased realization in P&K fertilizers. The 15% drop in urea realization put pressure on margins, although softer natural gas and ammonia prices offered some respite. The industrial products segment registered a strong turnaround, with sales up 13% year-on-year basis to INR 618 crore and EBIT improving from a loss of INR 17 crore to a profit of INR 54 crore. The improvement was led by higher sales of traded products such as ammonia and higher production volume of HX Crystals, which overcame the headwinds in caprolactam and other major industrial products. While the caprolactam-benzene spread declined from $620 per metric ton to $512 per metric ton, cost optimization measures and product mix management supported profitability. Overall, the company maintained a healthy performance in Q2, demonstrating resilience against raw material volatility and sustaining growth momentum across both business segments. We continue to maintain a strong balance sheet with no long-term debt, healthy net worth, and adequate liquidity. Our liquidity position has also been supported by the timely disbursement of government subsidies, reflecting the proactive fiscal approach by the authorities. As of date, the company has received subsidy dues for P&K fertilizers up to third week of September and urea claims up to second week of October. This provides the foundation for advancing our CapEx roadmap as detailed in the investor presentation. The Sulphuric Acid V project is slated to be commissioned in coming quarters of current financial year, providing both incremental capacity and cost efficiency benefits. The project will cater the requirement of sulfuric acid for manufacturing of fertilizers like ammonium sulfate and ammonium phosphate sulfate. Further, the steam generated therefrom shall be available for utilization at Vadodara complex. Against the backdrop of an above normal southwest monsoon and higher minimum support prices for key rabi crops, healthy demand for agri inputs is expected to sustain in the upcoming quarters. The government has announced an NBS subsidy rates for second half of 2025, 2026, with a 10% increase in phosphorus and sulfur nutrient contents, aligning with the rise in the global raw material prices. The country also enters the rabi season with comfortable opening fertilizer inventories. During the third quarter, the company is well-positioned to achieve sales in line with availability built up through its domestic manufacturing capacities. The caprolactam-benzene spread is expected to remain under pressure in coming quarters amid oversupply conditions, a prolonged shutdown in China, enhanced U.S. tariffs, and continued influx of low price Chinese imports, which may keep prices across the nylon value chain subdued. Demand for melamine is projected to remain steady in both domestic and export markets. HX Crystal demand is likely to stay soft in the domestic market, though export volumes are expected to improve. Demand for other industrial products is expected to remain stable during the quarter, though pricing pressure may persist due to cheaper Chinese imports. Overall, the company anticipates stable demand and turnover in the industrial product segment in the next quarter. I now turn over the call for questions and answers. Thank you. 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 touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. The first question is from the line of Nirav Jimudia from Anvil Wealth. Please go ahead. Yeah, good afternoon, sir. I have a few questions to ask. Yeah. Sir, first is on our volumes for ammonium sulfate and ammonium sulfate phosphate. Last time when we interacted, you told us on the conference call that our expected volumes for FY 2026 would be close to around 10 lakh metric tons against 11.5, which we have clocked in FY 2025. Since we have already done 6.5 lakh metric tons of volumes in first half, are we revising that guidance in terms of the production and sales volume for both these grades? Actually, total volume may be 6.55 lakh, but in the last quarter there was a urea revamp, so availability of urea was lesser, and ammonium sulfate and ammonium phosphate sulfate. The production is continuous. I don't think any lesser capacity utilization is there. However, Mr. Varma, the ED marketing will give more justification on that. You are talking that overall Yeah. So even if you can guide for both these grades of fertilizer, what we are expecting for this financial year and also for Q3, that would be very helpful. See, in total, if you see the overall fertilizer next quarter, we are expecting this quarter, Q3, again, 5.5 to 6 lakh this thing. But Q4 is again a lean season for fertilizers and that is what we have been a little conservative on that thing. But we are trying to see that our plants are running completely on 100%. Okay. Because, sir, last year, Q4, we did close to around 350,000 tons of manufacturing volumes. So safe to assume that the number would be closer to that 350,000 in Q4? Yes. Correct. Also, sir, this improvement in profitability on a sequential basis, though on a YOY basis, it is down on a percent basis for fertilizer segment as a whole. You rightly explained because of the increase in the raw material cost. Since the subsidy rates have been revised upwards for phosphoric P grade, are we expecting some improvement in the margin for Q3 or should the similar number holds true for Q3 also? Yeah. There will not be much variation because only 10% in phosphorus and sulfur content is increased. That amount around 5%-7% in case of DAP increase, which is not a very big increase. However, if you see the prices of phosphoric acid is increased 20% and sulfur, you know that it is 150%. Correct. We are commissioning Sulphuric Acid V project. Sulfuric acid will be available for production of ammonium sulfate and ammonium phosphate sulfate here in Vadodara complex. Correct. That will give some type of relief while the increased price of sulfuric acid and sulfur. That may have a positive impact on the profit margins of the ammonium sulfate and ammonium phosphate sulfate. Correct. Sir, on the trading side, when we see our volumes predominantly on the P&K side, like we did close to around 1.07 lakh metric ton of volume. Was it more of the DAP side where government is compensating close to around 5% of the MRP as fixed margins to the player so that we can keep on importing the DAP? Is this because of the higher DAP volumes in the trading side? Yeah, you are right that around one lakh metric ton and over one lakh metric ton, we have imported DAP, and government prescribed 4% return on the MRP. So that is a secure business. So we imported, and to make DAP available in the Indian market, Indian farmers, we imported mainly DAP during the last quarter. Correct. Sir, the sales guidance of this 5.5 lakh to 6 lakh, what you mentioned for Q3, also includes our trading volumes, right? Yeah. Got it. Sir, second question is on, let's say, based on our current production of AS, APS and let's say the smaller amount of DAP, what we produce. Can you help us understand how much is our annual requirement for ammonia, phosphoric acid, and sulfuric acid? See, in case of our Sikka unit, we need around 3 lakh to 3.5 lakh PA solution for running the plant at 100% capacity, the way we are running today, and around 1.5 lakh of ammonia. Okay. Baroda complex, sir? Baroda, we have our own manufacturing. We are producing maybe around 20 PA and ammonia both here, so it's there. We are not depending on anybody here. Correct. Sir, this improvement in industrial products, what you mentioned in your opening remarks, we had done some ammonia trading also. From last one month, we have seen a substantial increase in the ammonia prices. Last quarter, you mentioned that we did something around INR 20 crore of profits through ammonia trading in first quarter. If you can also help us understand what was this number for Q2 and how we are seeing Q3 because of this increased ammonia prices. No, our mainly long-term contracts for ammonia is based on the import price plus delta. Whatever the increase in the price will not impact the margins in the ammonia trading. We are continuing the ammonia trading from the Sikka unit. Whatever imports of ammonia we are doing for our consumption, along with the volume for the trading, we process it from Sikka unit. I don't think that there will be much impact on our margins due to the price hike of ammonia. Any numbers you can quote for Q2 in terms of profitability from ammonia trading out of this INR 53 crore what we have reported for Q2? Sir, this INR 53 crore is not only from the ammonia alone. One of the profitable product is HX Crystal, which we are producing in the Baroda complex, and it comes under the IP segment. Correct. The HX Crystal is a good product where the intermediate product HS of caprolactam product is diverted to manufacture the HX Crystals. That new plant has started the production, and we are getting a good margin on that. Caprolactam is not that much profitable because of the international prices of the caprolactam are squeezing to a bottom line level. We are producing and concentrating on other products like HX Crystal. Ammonia trading is one part of the IP segment, but there are some more activities for improving this IP segment results. Correct. Sir, just to add here, what is our current capacity of HX plant and what rate we are operating currently? Our capacity is 9,000 metric ton per annum. We are having two plants, HX one and HX two. Both together, the capacity is 9,000 metric ton per annum. Our pricing, I would not like to share because it is a very sensitive pricing. Capacity is operating at full, no? Yeah, it is operating at full capacity, sir. Correct. Sir, last question from my side. Sir, we have already completed our urea revamp project, I think sometime in Q4 2025. So have we seen the benefit in terms of improvement in profitability? Last time you touched upon that we are in discussions for the government in terms of reimbursement of the cost, what we have incurred for this. So any thoughts here? Also, if you can share any discussions with the government in terms of the fixed cost reimbursement, since it is pending since long. So if you can just touch upon both these aspects, that will be very helpful. Thank you so much. Yeah. Urea revamping project, as you rightly said, has cut down the steam consumption, and the government is still fixing this subsidy. It is under consideration of the government, and they will provide something, whatever the rate they are fixing for GSFC, the subsidy reimbursement. We have already requested government to consider this return on net worth, what we have incurred the capital cost for revamping project. So it is under consideration in government. Taking fixed cost, it is also going on from the government level. We have represented and given our case for expectation, and they are in dialogue with all the companies, not only with GSFC. In fact, after few days only, we are having a meeting with the government to represent our case, what is the case what we are incurring. Got it, sir. Thank you so much, sir, and wish you all the best. Thank you, Neeraj. Thank you. Participants who wish to ask a question may press star and one on their touch-tone phone. The next question is from the line of Saket Kapoor. Please go ahead. Yes. Namaskar, sir, and thank you for the opportunity. Yeah. Hope I'm audible. Yeah. Yes, you're audible. Sir, just in the case you alluded in your opening remark that this has been the best quarter for quarterly performance for us. Going ahead, sir, how you are seeing the profitability will shape up for the second half and how will the demand for the rabi season, will it be there as the water level are at an optimum level? The fertilizer demand is always there. There is no problem. There was some heavy rains in some pocket of India. Barring that, I don't think any Our business is distributed in 15 states. We strategize placement based on that thing, so it is not impacted. We are small in fertilizer compared to the overall requirement, so business is not much affected. Got it. As far as profitability of the current quarter is concerned, whatever measures we are taking for cost optimization, like urea revamping and putting the solar plants and all other measures a company has taken, this is not one of its kind, but it will continue for a longer period. I think this profitability will continue. There is no hindrance. I am just now foreseeing for the next quarter, coming quarter, when, yes. Okay. Sir, what have we factored in in terms of the subsidy received for this quarter? Subsidies received during the quarter? Yes, sir. Yes. Also the one which has been clubbed with the revenue from operations. Actually, subsidy disbursal is not the problem for us, and the government reimbursed the subsidy very quick. So up to the last week of the last month, we have received the subsidy. Exact number I am finding. Yes, I got it. Subsidy received during the Q2 is INR 1,176 crore. Okay. Sir, I just joined the Okay. Thank you, Mr. Kapoor. Participants who have a question may press Star and One on their touch-tone phone. Participants wishing to ask a question may press Star, then One on their touch-tone phone. There is a follow-up question from the line of Neeraj Jimudia from Anvil Wealth. Please go ahead. Yes, sir. Just a follow-up. Sir, since we are starting our sulfuric acid plant in Q3 with a capacity of 198,000 tons, would there be any surplus sulfuric acid available with us to sell in the open market? No. We may not sell in the open market because in India, Sikka also is completely based on financial things. We will take the decision, but we can sell it to Sikka also because we need sulfuric acid there also. Correct. Okay. And sir, with this expansion, if you can just help us understand what is our current capacity of sulfuric acid at both the units, also for ammonia and phosphoric acid. Ammonia is 1,350 metric tons per day, which means this is around 4.45 lakh. Current sulfuric acid is 5.77 lakh metric ton per day, and we have 1.8, nearly 7.5 lakh metric ton per year for sulfuric acid. Ammonia is at 4.45 lakh, and in case of phosphoric acid, we have here 60,000 metric ton only capacity. Correct. This 4.5 lakh tons of capacity for phos acid, what you mentioned, is that capacity operating at full? Because then we would be require raw- No, not the phos acid. We are talking of sulfuric acid. Both are different, Neeraj. With the sulfuric acid, we have nearly 5.7 lakh ton of capacity here in Baroda unit. We are adding 1.8, which will be 7.5 approximately. In case of phosphoric acid, we have only 60,000 capacity approximately in Baroda, not more than that. Ammonia also, 4.45 lakh in Baroda. In Sikka, we don't have any capacity there for production. It's completely imported. Thank you so much, sir. Thanks. Thank you. Participants who wish to ask a question may press star and one on the touch-tone phone. There is a follow-up question from the line of Saket Kapoor. Please go ahead. Hello. Yes, Saket. Yes. Sir, the first point was about the industrial chemical segment. As you mentioned that we have taken necessary steps to improve the profitability, and you did mention about one of the components of the intermediate products that we are selling to avoid dumping more of caprolactam. So how do you see this segment performing for the remaining half of the year? It will continue as it is, I think, because HX Crystal plant is running at full capacity and there is not much change in the margins and sales of HX Sulphate. But it all depends on the caprolactam benzene spread. If it improves, then further there will be improvement in the margin of IP segment. Other than that, there is a melamine product where the sales realization in India is not that great if we compare it with the export sales. So we have increased the export side of the melamine. So we are realizing at least 20% higher sales price by exporting the melamine. So that is one more factor, sir, that it improves the IP segment margins. But sir, if we take the granular details of, we did industrial product revenue of INR 618 crore for the quarter, and our PBT comes out at INR 54 crore. So as you Yes. mentioned that the contribution has been from HX Crystals and melamine, can you further split into what are the major components to this profitability, which has contributed to this profitability? The main is the ammonia trading actually. Whatever ammonia we are trading, it comes in the IP segment. Accurate number, it is difficult to say, but there are three, four factors I have narrated. One is HX Crystal. Another is ammonia trading. Third is melamine export we have started, so there is better realization. All these sectors coming together improves the margins of the IP segment. Okay. And what would be the ballpark contribution from ammonia trading, and this activity we are going to continue going ahead? Yeah. This is long-term contract, actually. Whatever import price is there, I have narrated earlier. With some delta, we are providing ammonia to the corporates, so that will continue. Okay. Sir, can you give a color on the contribution for this quarter or for the first half? Contribution of which? Profitability from the trading of ammonia under the industrial product segment. Just now it is difficult for me to share this contribution and individual product contribution. We will discuss some other time regarding these details because it is price sensitive to the market. We would not like to disclose it just now. But there are factors in continuity that will allow us to create these margins in the trading business going ahead also, or this is only one-off period that we are enjoying this facility? No, this will continue as I have narrated that it is import price plus delta. So it is a firm contract. So that margin will always be available till the time our contract is there with the corporates, and we are supplying ammonia with the same margin. Okay. Sir, now coming to the CapEx part. What has been the capitalization for the first half, and then going ahead, our capital work in progress closing balance is INR 413 crore. So if you could just give some color which projects you will be capitalizing for the second half. The second half sulfuric acid V project, which is slated to be commissioned just within a month or so. So that work in progress must be lying in the capital work in progress. But apart from that, there is no major project to be capitalized in the near future. We have just started this in Sikka, this DAP train to be converted for, or having an additional facility to produce NPK grade of fertilizers. So that there is no much expenditure till now. But other than that, capital work in progress does not have much pending capital to be capitalized. Okay. Sir, lastly, there were news of fertilizer shortages, especially with the urea part for the last kharif season. So what is the current status of the same and how you see the rabi season preparation in terms of the shortages or the issues faced by the farmers with respect to the availability of fertilizers? The rabi will be good. Government has done great work by arranging for imported DAP and urea in time. So I don't think there will be any issues for any fertilizer in the rabi.