Deepak Fertilizers announces Q2 results; reports 237% YoY surge in net profit

Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL), one of India’s leading producers of industrial and mining chemicals and fertilisers, announced its results for the quarter ended September 30, 2024.

The company’s consolidated net profit more-than-doubled to Rs 214 crore for the second quarter ended September 2024 (Q2 FY25), on healthy volume growth.

DFPCL had posted a net profit of Rs 63 crore in the year-ago quarter (Q2 FY24). On a sequential basis, profit grew 7 per cent from Rs 200 crore in Q1 FY25.

Operating revenue grew 13 per cent year-on-year (Y-o-Y) and 20 per cent quarter-on-quarter (Q-o-Q) at Rs 2,747 crore. The company achieved an 83 per cent Y-o-Y increase in sales volume of manufactured bulk fertiliser, marking the highest sales in a quarter. Earnings before interest, taxes, depreciation, and amortisation (Ebitda) margin improved to 18 per cent compared to 12 per cent in the year-ago quarter.

The impressive revenue growth was primarily driven by the Crop Nutrition business, which experienced an 18 per cent Y-o-Y increase in revenue, while the Chemical business grew by 8 per cent Y-o-Y despite a lean quarter for the chemical sectors. Fertiliser and Chemical businesses acted as a natural hedge, enabling the company to deliver consistent and improved performance.

DFPCL is among India's leading manufacturers of industrial chemicals and fertilisers. The group mainly operates in three verticals - industrial chemicals, crop nutrition (fertilisers) and technical ammonium nitrate (mining chemical).

The company has a diversified product range, broadly comprising industrial chemicals (IC), technical ammonium nitrate (TAN) and complex fertilisers. DFPCL holds a market leadership position in TAN and key IC products such as nitric acid, isopropyl alcohol (IPA). Further, commissioning of the ammonia project during fiscal 2024 has led to a healthy backward integration as ammonia is a key raw material for production IC, fertilisers, and TAN.

As India continues to grow, the chemical and fertiliser sectors are poised to thrive. The demand outlook for the Crop Nutrition, Mining Chemicals, and Industrial Chemicals Business is well aligned with India's growth story, providing strong and positive tailwinds, the management said. The company said it is actively working on the execution of the TAN Project and the Nitric Acid Project in Gopalpur and Dahej, respectively, to capitalise on future growth.

On the business outlook of the industrial chemicals segment, for Nitric Acid, the demand and margins are expected to be stable over the next few quarters. Propylene-based IPA demand and margins are expected to be stable and improve following the implementation of the ADD on Chinese suppliers over a few quarters, the company said.

The mining and infrastructure is expected to pick up post monsoon as demand for Power (Coal), Cement & Steel is expected to increase thereby providing robust support for TAN demand.

Above-normal monsoon rainfall in the company's core states has significantly enhanced groundwater table as well as water reservoirs for irrigation, which will help promising Rabi season ahead. The management expects the acreages under Rabi cash crops to go up especially for Sugarcane, Onion, and Potato etc.