Deepak Fertilisers & Petrochemicals has reported a strong performance for the first quarter, with significant growth in both revenue and profitability.

Financial Highlights

The company's operational revenue stood at Rs. 2,659.00 crores, marking a robust 17% increase year-on-year. This growth was driven by broad-based performance across all segments. Net profit saw an impressive 22% year-on-year growth, reaching Rs. 244.00 crores, with a PAT margin of 9.1%.

DFPCL's EBITDA reached Rs. 513.00 crores, up 10% year-on-year, with margins improving to 19.3%, a 130 basis points increase compared to the same quarter last year. This improvement reflects an enhanced product mix and disciplined cost management.

Debt Reduction and Financial Position

The company successfully reduced its net debt by Rs. 225.00 crores, improving the net debt-to-EBITDA ratio from 1.72x to 1.5x. This reduction was achieved despite ongoing capital expenditure, demonstrating DFPCL's strong cash flow management.

Segment Performance

The fertilizer segment delivered stellar year-on-year growth of 125%, driven by higher value-added products and favorable market dynamics. The chemicals segment, however, saw a 9% year-on-year decline in profits due to pricing softness in IPA and ammonia.

Strategic Initiatives

DFPCL's journey from commodity to specialty products continues to gain traction, with specialty products now contributing 25% of the company's revenue. The crop nutrition business, in particular, has shown strong growth.

Ongoing Projects

Two major projects are currently underway:

1. Gopalpur TAN project: 80% complete
2. Dahej acid project: 57% complete

Both projects are expected to commence operations by Q4, positioning DFPCL for future growth.

Export Quota Increase

The company received an increase in its export quota for Technical Ammonium Nitrate (TAN) to 50,000 metric tonnes per year, opening up new opportunities in international markets.

Legal Update

DFPCL received a favorable ITAT ruling for its subsidiary, Mahadhan Agritech Limited, eliminating a tax demand of Rs. 581.00 crores for assessment years 2016-17 to 2021. This ruling provides significant regulatory clarity for the company.

Management Commentary

Mr. S.C. Mehta, Chairman and Managing Director of DFPCL, commented on the results: "I am happy to share that in the quarter we just closed, we have had a 17% improvement in the top line and a 22% jump in the bottom line over the same quarter last year. Our journey from commodity to specialty continues, with almost 25% of our top line now emerging from this shift."

Mr. Subhash Anand, President and CFO, added: "Q1 demonstrates our continued resilience and agility in a dynamic market environment. Our integrated strategy anchored in innovations, operational excellence, and customer centricity is delivering consistent performance across all business lines."

With these strong results and ongoing strategic initiatives, Deepak Fertilisers & Petrochemicals appears well-positioned for continued growth in the coming quarters.

Deepak Fertilisers & Petrochemicals Corporation Limited (DFPCL) has reported impressive financial results for the first quarter, reflecting its strategic transformation and focus on specialty products, setting a positive tone for the upcoming Kharif season.

Financial Highlights

Segment Performance

The company's Chemicals segment reported a 9% year-on-year decline in profit, primarily due to softness in IPA and Ammonia prices. However, this was offset by the Fertiliser segment, which delivered robust year-on-year growth of 125%.

Strategic Shift Yields Results

DFPCL's strategic realignment has shown significant progress, with specialty products now accounting for 45% of the Crop Nutrition Business (CNB) revenue in Q1. This shift is evident in the following areas:

1. Croptek volumes improved by 73% year-on-year
2. Specialty fertiliser volumes grew by 21% year-on-year
3. The B2C segment contributed 16% to revenue in Mining Chemicals

Operational Highlights

• Export quota for Technical Ammonium Nitrate (TAN) increased to 50,000 MT per year
• Net debt reduced from ₹3,305.00 crore to ₹3,078.00 crore, despite a capex spend of ₹377.00 crore in Q1
• Net debt to EBITDA ratio improved from 1.72x to 1.50x during Q1

Positive Outlook for Kharif Season

DFPCL expects a strong Kharif season, attributing the positive outlook to favorable weather conditions and increased farmer engagement. The company's Chairman and Managing Director, S.C. Mehta, stated, "The strong start underscores the impact of our strategic transformation and disciplined execution. Our continued focus on specialty products, customer engagement, and operational agility is driving tangible results."

Project Updates

• The Gopalpur TAN project is approximately 80% complete
• The Dahej Nitric Acid project is around 57% complete
• Both projects, with a combined capex of ₹4,661.00 crore, are progressing as planned for commissioning

Favorable Tax Ruling

Mahadhan AgriTech Limited, a subsidiary of DFPCL, has received a favorable ruling from the Income Tax Appellate Tribunal (ITAT) in Mumbai for Assessment Years 2016-17 to 2020-21. This ruling has nullified tax demands aggregating ₹581.00 crore and is expected to lead to the withdrawal of penalty orders totaling ₹479.00 crore.

Revised Project Cost for Gopalpur TAN Project

The Board of Directors of Deepak Mining Solutions Limited (DMSL), a wholly-owned subsidiary of DFPCL, has approved a revision in the estimated cost of the Technical Ammonium Nitrate (TAN) Project at Gopalpur. The project cost has been revised to ₹2,675.00 crore, up from the earlier estimate of ₹2,223.00 crore in November 2020. The increase is attributed to geopolitical issues, price increases in materials, additional safety and efficiency features, and investments in effluent treatment systems.

Despite the cost increase, DFPCL maintains that the project's financial metrics remain robust, with the Project IRR continuing to be well above internal threshold benchmarks.

As DFPCL continues to focus on its strategic transformation and expansion plans, the company appears well-positioned to capitalize on the expected strong Kharif season and drive long-term value for its stakeholders.