Ladies and gentlemen, good day and welcome to Paradeep Phosphates Limited Q2 and H1 FY26 earnings conference call, hosted by Antique Stock Broking. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Manish Mahawar from Antique Stock Broking. Thank you, and over to you, sir.
Thank you, sir. Hello everyone. I am pleased to host today's earnings call of Paradeep Phosphates. We have a leadership team represented by Mr. Rajeev Nambiar, CEO, Mr. Harshd eep Singh, Chief Commercial Officer, Mr. Bijay Kumar Biswal, CFO, Mr. Alok Saxena, Head Corporate Finance and IR, Mr. Susnato Lahiri, Joint GM, Strategy, IR and ESG on the call. Without any delay, I would like to hand over the call to Mr. Nambiar for opening comments, post which we will open the floor for Q&A. Thank you, and over to you, sir.
Thank you, Manish. Am I audible properly?
Yes, sir, you are audible.
Okay. Good afternoon, everyone, and welcome to Paradeep Phosphates' Earnings Call for the second quarter and first half of FY26. I appreciate your time and interest in our company. I trust you have seen our earnings presentations and press releases, which have been circulated and are now available on the website and stock exchange. Giving an overview of the quarter as well as the H1, Q2 and H1 FY26 have been strong and defining periods for PPL, underscoring the strength of our operations, the execution of strategy, and our readiness for the next phase of growth. This quarter, we not only delivered a robust financial and operating performance but also took a transformational step towards the completion of the merger of Mangalore Chemicals and Fertilizers with ourselves.
This integration positions PPL as a truly pan-India fertilizer company, broadening our southern market presence, strengthening customer access, and unlocking synergies in procurement, logistics, and product mix. Coming to the performance highlights, our Q2 operational performance was robust. Production rose 19% year-on-year to 10.06 lakh tons, and the sales volume grew by 30% to 13.55 lakh tons. Growth was broad-based, led by value-added NPK grades, notably N20 volumes grew by 52% and TSP 339% year-on-year. For the first half, production and sales reached 1.86 million and 2.3 million tons, respectively, up by 17% and 28%. Financially, the company continued to demonstrate scale leverage and margin discipline. Revenue from operations in Q2 rose 49% year-on-year to INR 6,872 crores. EBITDA grew by 32% to INR 698 crores with a margin of 10.1%, and PAT improved by 34% to INR 342 crores.
For the first half, revenue grew by 46%, EBITDA by 69%, and PAT by 135% YOY, a reflection of both volume growth and mixed enrichment. We also sustained a strong financial foundation. Our cash conversion cycle improved by 30 days, coming to 58 days now, and net debt to equity stood at 0.66, maintaining ample balance sheet flexibility to fund future growth. Strategic progress. A key highlight in this quarter was the announcement of our INR 3,600 crore investment program, which marks the next chapter of PPL's growth. This program will add 1 million tons of new granulation capacity at our Paradeep site, expanded backward integration of phosphoric acid by 0.5 million tons and sulfuric acid by 1.5 million tons across Paradeep as well as Mangalore site, which will make all the three sites fully backward integrated.
These projects will elevate PPL total capacity to almost 5 million tons over the next 2.5 years, positioning us as India's largest fully integrated private sector fertilizer manufacturer. This strategic investment exemplifies our focus on self-reliance, cost competitiveness, and long-term value creation, funded through a disciplined balance of internal accruals and long-term debt. Coming to brand and market leadership, on the brand front, we are privileged to welcome our ace cricketer, Rahul Dravid, as PPL's brand ambassador. Rahul's values (trust, consistency, and integrity) mirror PPL's ethos and our relationship with the Indian farming community. His association will amplify our efforts in promoting innovative and sustainable farming solutions under our Jai Kisaan Navratna and Jai Kisaan Mangala brands. Through our expanded distribution and digital outreach, we now engage with more than 10 million farmers across 18 states, supported by 75,000 retailers, 6,000 dealers, and a strong on-ground advisory network.
Coming to the outlook, looking ahead, we remain optimistic about fertilizer demand, supported by a favorable rabi season, continued government trust on soil health, and rising shift towards balanced and specialized nutrient application. Our strategic priorities are pretty clear: scale efficiency, deepen backward integration, accelerate product innovation, and embed sustainability at the core of our operations. We continue to advance our ESG journey with our fourth ESG report now published and externally assured by TUV India. Our S&P Corporate Sustainability Assessment score continues to place PPL among the top 2% of chemical companies globally, reaffirming our leadership in sustainable business practices. In summary, Q2 and H1 FY26 demonstrate PPL's operational resilience, financial strength, and the strategic momentum we are building on.
With MCFL integration complete, capacity expansion underway, strong market fundamentals, and building a larger, stronger, and more future-ready PPL, it is positioned to create enduring value for our shareholders and for India's farming community. Thanking everyone for the continued support, I now open the floor for questions.
Thank you very much, sir. We will now begin the Q&A session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Prashant Biyani from Elara Capital. Please go ahead.
Yeah, thank you for the opportunity. Sir, it is heartening to see what our market cap was three years back when we listed. We are investing almost a similar amount today in capacity expansion. Surely, we have come a long way in a short period of time. My first question is, if you can share the year-wise split of CapExf of INR 3,600 crore, that would be helpful. Am I audible?
Yeah, yeah. So this investment will be made over a period of two and a half years. So every year, we'll have around this INR 1,500 crore of investment. So in two and a half years, this INR 3,600 crore will be invested. So by the end of financial year 2028, the full capacity, whatever we are initiating that increase, that will be commercially starting production.
Sir, for the remaining period of 2026, how much should we take as investment towards these CapExf?
No, it will be around to the tune of around INR 500 crore.
Okay. And 2027, 1,500, and then another 1,500 in 2028?
Yes, yes. Perfect.
Okay. And sir, secondly, can you also share the PPL's standalone performance, how it was in Q2? That will be great.
No, generally, the post-merger activities, which is the appointed date 1/4/2024, we are supposed to consolidate the account. So the account has been consolidated after the Indian accounting standard mandated, and this result reflects the consolidated account with MCFL. So MCFL. So we have not prepared, or we are not supposed to prepare on a standalone basis.
Sure. That's it from my side, and all the best for a flawless execution. Thank you.
Thank you.
Thank you. Next question is from the line of Animesh Bilachani from Namo Traders. Please go ahead. Animesh, your line is unmuted. Please go ahead with your question. As there is no response from the current questioner, we'll move on to the next question. But before we go on to the next question, a reminder to the participants to ask a question. You may press star and one. Next question is from the line of Riju from Antique Stock Broking. Please go ahead.
Hello, hi sir. Congrats on a great set of numbers. So my question is regarding the capacity addition that we've announced. So at the Paradeep site, we have stated that we'll be doing additional 0.25 MMTP of phosphoric acid. So this is including what we have announced earlier or exclusive of that CapExf?
This will be exclusive of the last CapExf, actually. Currently, we are at 0.5, and we are increasing by 0.2, which is expected to come on stream next year. This is going to be beyond that.
Okay. Total at the Paradeep site will be roughly around 0.95 million or maybe a million metric ton capacity.
Yeah, absolutely.
We will be having, right?
Right. Yeah.
Okay. Understood. Yeah. And second, in terms of, we have stated that the capacity will take roughly around two and a half years. And yeah, so two and a half years, it will take. But in the PPT, we have mentioned that the flow into the numbers should come from FY28. But as per the calculation, I think the numbers should come from the H1 or H2 of FY28. Is that correct, answer?
Yes, yes.
In terms of the other.
Yeah, go ahead. Go ahead.
Yeah. In terms of the other aspects, if I look at your current granulation capacity, the volume growth will not be there maybe in FY27. Can we expect the granulation capacity might come a bit early, or maybe the CapExf that we have announced for roughly 35-3600 crore, that will be not phase managed, or maybe it will come at a one go? It would clarify that thing.
The capacity addition of 1 million will come at one go. And to answer your earlier question, that there won't be any capacity addition, but there will be incremental capacity addition by way of brownfield expansion, which is ongoing in the granulation trains at all the three locations. I think we expect at least 0.2 million to come for the next year.
Yeah. So that you have indicated earlier, right? So two lakh ton kind of a capacity by de-bottlenecking, you have with the online from next year onwards, right? And sir, in terms of the subsidy receivables, if you could indicate the number for this quarter.
The subsidy receivable as of 30th September is around INR 3,275 crores.
How much is due out of this?
No, out of this, around INR 1,000 crore is due, and 1,000 is INR 2,200 crore on account of the POS, which has happened in these subsequent months.
Okay. Understood. And sir, if you could answer a housekeeping question, how much is the closing inventory we have at the dealer or retailer level, and out of which, how much will be the manufactured volume for DAP and NPK?
Yeah. So in terms of the trade stocks that we are currently having, we are having approximately two months inventory, approximately around 8 lakh metric ton, including the urea and other products. And we've got a big consumption season in November and December. And this will go up for farmer consumption in the immediate next two months.
Understood. And sir, in terms of DAP availability in the domestic market, so how is that for the releases?
I think, I mean, approximately the country stocks are around two million tons. It's a fairly kind of good availability, which is there. It's a combination of DAP, TSP, and NPKs. The availability is pretty decent this year.
20 NPK stock we have only for DAP. Is that correct?
No, this is not our stock. I'm talking of the industry stock, what you're talking about.
Yes, yes. For the industry, for the industry, DAP is two million metric tons. Right. And sir, last year, how much was the number of?
Last year was the lower availability compared to this number. Approximately, I think maybe around 12 or 13 lakh metric tons, approximately.
Okay. Understood. Thank you, sir. Thanks for answering all my questions.
Thank you.
Thank you. Next question is from the line of Gagan Thareja from Groww Mutual Fund. Please go ahead.
Good evening, sir. I hope I'm audible.
Yes, please go ahead.
Yeah. So the first question is on the funding of this CapExf of INR 3,600 crore. How much incremental debt will you require for this, and what could then the peak leverage be?
The project of this INR 3,600 crore will be financed 30% equity and 70% debt. So we have the headroom to have that.
Okay. The granulation capacity of 3.9 million tons, currently, what is the utilization of that?
Yes, 100% utilized.
Okay. So you are 100% utilized, and next year, you might have an incremental 0.2 million tons from brownfield. By when will that be commissioned?
Yeah. Gagan, for the purpose of modeling and all, FY26, we are almost close to 10% utilized in terms of capacity utilization. Next year, we will have some sort of a backward integration coming through in terms of phosphoric acid of 200,000 tons and sulfuric acid of 100,000 tons at the Mangalore site. So this should incrementally give us about close to 350 crores of EBITDA in FY27. And FY28 is when the entire CapExf plan of 3,600 crores will get stratified in terms of the granulation and concomitant backward integration.
But if I look at the commissioning time period, it is two and a half years out, which means it will get commissioned in FY29 and not FY28. Am I wrong there?
No, we are actually contemplating to kind of start the operations by the end of FY28. So we might kind of get to realize some cash flows in FY28 itself. But you're correct. The fully realizable cash flows will come through in FY29.
In FY28, then from a volume perspective, how would you address the volume growth requirements, if there are any?
Yeah. So the way we look at it is, see, our kind of target number, what we are gearing up for is around 5 million tons. And we are looking at trading opportunities to augment the volume. So that's how we look at the overall basket. But the whole kind of distribution network and the market network that we have put up, so we have now geared up for a 5 million metric ton plan. And that's in line with our growth plan for the capacity expansion.
Okay. My question was that, is it reasonable to assume that between 2027 and 2028, in terms of manufacturing, your volumes are capped because you are at more or less?
Yeah, you're right. That's a part of the growth cycle. That's a normal this thing. And we will try to look at opportunity because the market is ready for doing trading, basically. Okay? So we are already doing good trading volumes of DAP and TSP and NPKs, and we will be doing that.
Okay. Thanks. Thank you. I'll get back in the queue. Thank you.
Thank you. Next question is from the line of Krishan Parwani from JM Financial. Please go ahead.
Yes. Hi, sir. Thank you for taking my questions. A couple from my side. Firstly, I think I missed your expectation for manufactured sales volume for FY26 and FY27. Can you please help me with that?
Can you repeat the question?
Sure. So what is your expectation of manufactured sales volume for FY26 and FY27? I'm sorry if you have already indicated that. Yeah.
Yeah. FY26, at the halfway through, Krishan, we are already at—no, we'll just give you the number just a second in terms of production.
Yeah. At that number, we are at 23.1 lakh metric tons.
So we are already at 23 lakh metric tons. So by H2, in fact, you can assume similar numbers. And that should continue through FY27 as well. Just that in FY27, we might also do a bottlenecking of the existing facility and improve the granulation capacity by another 100,000 or maybe 150,000 tons.
Okay. So the total capacity. Sorry. Go ahead, sir.
Yeah, yeah. Please go ahead. You go ahead. I'll clarify.
I was referring to the presentation. Let's say your total granulation capacity currently is 3.9. Given, I think, Susnato, you mentioned your first half was 0.23. If I get the run rate 0.23, it becomes, sorry, 2.3. Then it becomes 4.6. On a 3.9, you are saying you are producing 4.6. Is that correct?
So just to kind of give an overview of this thing, see, the outlook for the whole year that we are talking of, we are talking of a volume of around 40-42 lakh metric tons. Okay? Out of which, around 3.7 lakh metric tons will come from the manufacturing capacity. And around 5 lakh tons will come from the traded volumes. Okay? That's for the current fiscal year. So that's how we are looking at it.
Okay, so 4.6, 4.7 is the total sales volume?
4.2-4.3 is the total volume that we are looking at. We have done 23 lakh metric tons. We plan to do another 2 million tons, so that is around 43 lakh metric tons.
Sure. Got it. And what will be your maintenance CapExf, let's say, for FY27 and FY28, over and above the incremental capacity expansion? You will need some maintenance CapExf. So what will be that number?
This is typically around INR 200-300 crore.
Okay. So it's fair to assume like INR 1,800-1,900 crores kind of a CapExf rendered for FY27 and FY28?
Yeah, yeah. Correct.
Okay. Got it. And let's say, what's your EBITDA per ton target for the consolidated entity for FY26 and FY27?
See, as an industry average, 4,500 to 5,000, that is maintainable, and we will have it that.
Okay. So after this, let's say, full backward integration, right, becoming all the three sides becoming self-reliant, where do you expect it to move to? From 4.5 to 5.5, where do you expect it to move to?
Yeah. Another INR 1,000 will be added.
Okay, so 5.5 to 6.5, that will be the range after that?
Yes. Yes.
Yeah. And just a last bit of clarification. I understand that you are consolidating full financials now. But what was the sales volume of the Mangalore plant given the amalgamation happened in October? That is post the second quarter end?
I'll tell it to you. INR 4.23 lakhs for the H1. For the H1, it is INR 4.2 lakhs.
4.2 lakh for Mangalore plant?
Yeah.
Okay. Thank you so much for patiently answering my question. Wish you all the best for the upcoming CapExf. Yeah.
Thank you. Thank you.
Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Somil Shah from Paras Investments. Please proceed.
Yeah. Hi. Good evening, management. So my question is on this INR 3,600 crore CapExf. So this CapExf, what we are doing, so what will be our asset turn on that CapExf? Hello?
Yes, sir. You are audible. Yes, you are audible.
No, it will be around 2-2.5 times.
2-2.5 times. And by when you think that we can reach the peak capacity in this plant?
So this will take gradually, maybe within a year, in terms of the commissioning.
So the commissioning, you said, is somewhere in 2028, right?
Yes. Yes.
Okay. So the revenues will itself start from 2028, and then peak capacity will be in 2029?
Yes. Yes.
Is my understanding correct?
Yeah. Yeah.
Okay. And so, I mean, for the current quarter, our EBITDA margin has gone down. I mean, the previous quarter, it was around 13%, and now it has gone to 10%. So any particular reason for that?
So we don't look at—no, you have to see it on an apple-to-apple basis. So the price and everything, average it out.
Yeah. So in our industry, which is subject to kind of a lot of macro volatilities, primarily because of the raw materials being imported from various parts of the world. So we go through various commodity cycles, price cycles. And you have to look at it in the long, actually. So I think the average, we are doing fairly good, actually. And as guided previously, we try to kind of do around 5,000 number by the end of the year.
Okay, and what was it currently for this quarter?
I think this quarter was close to about INR 5,200 per ton.
I don't see. Okay. I don't see.
5,200. Yeah. This quarter, it's INR 5,200.
Okay. And for the remaining half, I mean, post the merger of Mangalore, so can we increase this INR 5,200?
Yeah. Yeah. So given this investment plan that we have of INR 3,600 crore, which is to kind of set up the greenfield granulation and also kind of do a concomitant backward integration. So if you analyze it, the backward integration undertaking that of 0.5 million tons of phosphoric acid, that will be more than adequate to kind of address this incremental 1 million ton of greenfield. So the remaining will be serving the other two sites, which are not backward integrated that way. So essentially, this backward integration will definitely give a fillip to the EBITDA per ton margin, which, in fact, was guided INR 1,000 incremental.
Okay. And that will be post FY28?
That's correct. But FY27 also, three quarters back, we announced 200,000 tons of phosphoric acid capacity from the current 500,000 tons. So that will actually incrementally come in FY27. Plus, there is a granulation capacity that will come in FY27 to the tune of 100,000 tons, plus a sulfuric acid capacity of 100,000 tons at the Mangalore site. So these three put together should also incrementally add to the bottom line in FY27.
Okay. Okay. I mean, so to the previous participant, I think you said something like 350 crores EBITDA in FY27. So it is because of that? That will be additional 250 crores?
That's correct.
Yeah. Okay. That's it from my side. Thank you and all the best.
Thank you.
Thank you. Next question is from the line of Pranaya Kothari from AUM Capital Market Private Limited. Please proceed.
Yes. Congratulations to the management team on the strong quarter and this new merger closure. Just a couple of questions from my side, sir. So with this new integrated granulation unit at Paradeep and acid complex, how much do you think you will import? Dependence will be reduced in that coming year. And what would be the incremental margin or EBITDA per ton which you see in the next two years post-commissioning?
Yeah. Ma'am, as we already mentioned, the incremental margin improvement will be to the tune of INR 1,000 per ton, INR 1,500 per ton. And in terms of percentage backward integration, with all the capacities being live by the end of FY28, we'll be 100% backward integrated for all the three sites put together. And that's the target that we are actually racing towards.
Okay, so what is the timeline for issuing PPL shares to the MCF shareholders and clearing the share capital suspense account, which is actually given in the notes?
Yeah. I think so the record date is already announced, which is 30th of October. We are doing some secretarial proceedings, I think, which should happen in the next 30 days. So within the next 30 days, we expect to allot MCF shareholders the requisite shares in PPL.
Yes, sir. So I think the dividend payout of INR 1,500 in H1, is it very conservative given the integration phase? Will the management continue with the low payout till maybe the CapExf stabilizes in the future?
Sorry? Go ahead. Ma'am, we didn't follow the question. Can you just repeat it?
Sir, I just saw the dividend payout of INR 100 in H1. Is it on a conservative basis? Will the management continue with the low payout till the major CapExf plan is completed?
No. Whatever dividend was paid, that was for the year 2024, 2025, which is now up to the AGM and paid. So the dividend for the next year, that will be the decision will be taken after this finalization of 2025, 2026 account. So this dividend, what you are referring, that is for 2024, 2025.
Okay, sir, so out of INR 471 crores of CapExf in H1, how much relates to the newly announced integrated granulation and acid plants versus regular maintenance?
Actually, the new announcement, the CapExf will come mostly for the cycles only. The last quarter, we have actually commissioned our Sulfuric Acid plant of 1,500 tons per day, almost 500,000 tons, so partly, it has come in that.
Okay, sir. Thank you. Thank you so much. That's all from my side.
Thank you. Participants, if you wish to join the question queue, you may press star and one. Next question is from the line of Sandeep Mukherjee from SKP Securities Limited. Please proceed.
Yes, sir. Thanks for taking my question. Sir, my question was, what is the split between TSP, DAP, and MOP volumes for Q2 trading volumes?
Yeah. So as far as Q2 is concerned, the TSP volume that we did was 1.6 lakh metric tons. So there was last year volume of 0.6 lakh metric tons. So that was a growth of 158%.
As for DAP, MOP?
Yeah. So MOP and DAP, overall, if you look at the trading portfolio, okay, for H1, what we have done in trading portfolio for TSP, we have done, just give me a minute, for H1, we have achieved totally 1.63 lakh metric tons. MOP is around 0.7 lakh metric tons. And imported DAP is approximately another around 1 lakh metric tons. So for the, sorry. No, this is for H1. And the guidance for the whole year is total we will be doing close to 5.5-6 lakh metric tons. That's the guidance for the whole year, the entire trading portfolio. Out of which 3 lakh tons would be TSP, 2 lakh plus tons will be DAP, and the rest will be MOP.
Understood. Understood. And what is our trailing EBITDA per ton here? Or EBITDA?
See, in case of trading, we don't have a separate this thing. That's guided by the government scheme where they have given a kind of commitment of 4% of the this thing, of the MRP. That's what the government commits on that one, on the traded volume.
Is this for the whole portfolio, 4%?
This is for the DAP, TSP primarily. MOP, we guided by a normal trading contribution of around 8% to 10%.
Right. Okay, sir. Understood. Thank you, sir.
Thank you.
Thank you. Participants, to ask a question, you may press star and one. Next question is from the line of Mr. Manish Mahawar from Antique Stock Broking. Please go ahead.
Yes, sir. Just in terms of this NBA's late announcement, once again, in the last week, what's your view and how do you see the H2 EBITDA per ton or margins for a company or industry size?
The NBA's impact, mainly, this is on P, on phosphoric acid, not on ammonia or K. So.
Hello?
Good. Hello.
Yeah. So how do you see the margin? Kind of PI, I can answer.
Yeah. Margin, there will be not much impact on the margin because the raw material price increases. So it will be almost sort of squared off.
Okay. And have you taken any price hikes, sir, in the market? MRP, I'm talking about.
Yeah, so we've already taken a price increase for the NP case, okay? And we're leaders in the market as far as the price realization for the market is concerned.
Is it possible to share the number, price hikes?
Yeah. So for NPK 10:26:26, our MRP is ₹2,025. Okay? Earlier, it used to be ₹1,900 a bag. Okay? So we took a price increase of ₹125 for the Rabi season. And same thing is for 12:32:16. And one of our flagship grades, the 1919, that is at ₹2,175 a bag.
Okay. Understood. Okay. And in terms of during the quarter, have you booked any amount or maybe subsidy related to this NBA's notifications on channel inventory?
Sorry?
Yeah. Repeat. Repeat. We couldn't see.
Yeah. This NBS's notification related any subsidy we have booked during the tonnage in the quarter?
Yeah. The post-quarter we had, the increase in the subsidy to the tune of around 40 to 50 crores has been accounted for.
Okay. Understood. And in terms of in the merger, right, MCFL with the PPL, I think we have talked about some synergy benefit, right? Could you share what could be the synergy benefit can come and which can prove the numbers in the next year or maybe overall basis?
No, there was significant synergy benefit in terms of improving operational reliability, supply chain, the procurement contracts. And I think we will not be able to quantify at the moment, but this will be a good number which you will see in the next 22 to 24 months.
Okay. And in terms of this new CapExf, right, you are using, I think, some debt to equity could be at the 70% and the 30%, right? But that is a max debt number what you're talking about, 70%, right? It should be much, much lesser in terms of.
Yeah. For the upcoming projects.
Yeah. Upcoming projects. 70%, 30%, what you said, right? So this number will be much, much lesser in terms of debt perspective, right? Because our internal will be significantly higher in the next two years, which will be basically required for our new CapExf.
So typically, in long-term projects, your equity contribution is around 25%. So we have taken that 30%. The additional cash flows that will be available to the company will be used for other strategic initiatives and growth initiatives, which we will let you know in due course of time.
Okay. Understood. Yes, sir. Best from our side, and all the best.
Thank you.
Thank you. Participants, to ask a question, you may press star and one. Ladies and gentlemen, anyone who wishes to ask a question may press star and one. Next follow-up question is from the line of Gagan Thareja from Groww Mutual Fund. Please go ahead.
Yeah. Thanks for taking the follow-up. So you mentioned an incremental EBITDA of INR 350 crores from the backward integration next year. Additionally, something more from the MCFL synergies. But to a certain degree, that will be offset because incremental volumes partially will be traded volumes. So just want to understand, is the incremental EBITDA that you're talking of net of the impact on margins of the traded volumes?
Not for Gagan. See, if you look at it this year, as has been guided, we'll be doing close to a margin of 4.2 to 4.3 million, out of which a good 10 to 15% will be traded. So the similar kind of a percentage share of traded will actually be expected to happen in FY27 as well. And trading is actually over and above the manufacturing realizations that we kind of get. The backward integration will add to the manufacturing realizations. Trading will be over and above. So there's no netting off. There's no squaring business here.
No. The reason I ask is that if you are constrained by your manufacturing volumes only having so much headroom till the time the new capacity comes in, will the sales mix not incrementally move in favor of traded volumes? And therefore, will it not have a certain impact on margins?
Just to share with you, so see, one directional change in volume mix that we're trying to do is going towards more value-creating NPK. Okay? That's the shift that we are trying to drive in the portfolio volumes. Second, like what you rightfully said, we would look at augmenting our trading volumes as long as it creates value. While from a market side, we are ready to augment the traded volumes, and we look at that opportunity. While the manufacturing capacities come up, we will be looking to scale it up, especially TSP, which is a strategic portfolio that we're trying to kind of build in the Indian market. That's what we'll be focusing on. The other focus products that we're trying to grow in the portfolio is N20. We are among the top two players today in the country.
So that's how we're looking at it. But yes, you're right. Till the time the full capacity expansion happens, so there will be a gap in that. But we will try to augment that volume through the traded volumes.
Okay. So what you're saying is that while you increase the traded volumes, within the manufactured volumes, you intend to shift to higher ASP or higher realization?
Yeah. Yeah. Absolutely.
So that will take care of the impact there.
Yes.
Right, sir. Right. And from an FY28 perspective, is there further room to increase capacity by debottlenecking in FY28 till the 1-million-ton capacity comes through, or that is not possible?
Before that, actually, we should be able to augment it by 0.2 million. And I'm sure, actually, because this is the idea which always circles in the manufacturing facilities to go for brownfield expansion, smaller debottlenecks. So there will be many ideas which will come around. So beyond 28 also.
So you're saying 27 and 28, you will have some room to increase volumes from the debottlenecking and then augment that with additional trading volumes, and then that 1 million. Okay. I understand.
That's right.
Right. Thank you. Thank you, sir. I'll get back in the queue. Thank you.
Thank you.
Thank you. Participants, to ask a question, you may press star and one. Ladies and gentlemen, as there are no further questions from the participants, I would now like to hand the conference over to the management for the closing comments.
Thank you, everyone, for taking the time to join our earnings call. If you have any further questions, please reach out to our investor relations team. Thank you once again.
There are more than 20 parties in the conference.
Thank you.
Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.