- Total Operating Revenue (Q4): INR 2,086 crores
- Operating EBITDA (Q4): INR 38 crores (21%)
- Net Profit (Q4): INR 220 crores (versus INR 61 crores last year)
- Total Operating Revenue (FY24): INR 8,676 crores
- Operating EBITDA (FY24): INR 1,287 crores
- Adjusted Operating EBITDA Margin (FY24): 18.3% (excluding onetime subsidy and ramping-up costs)
- TAN Sales Volume Growth (Q4): 26% Y-o-Y, 39% Q-o-Q
- AN Melt Sales Volume (Q4): All-time high
- TAN Capacity Utilization (Q4): 101%
- TAN Capacity Utilization (FY24): 92%
- IPA Sales Volume Growth (Q4): 27% Q-o-Q, 6% Y-o-Y
- Nitric Acid Capacity Utilization (Q4): 82%
- Nitric Acid Capacity Utilization (FY24): 86%
- IPA Capacity Utilization (Q4): 102%
- IPA Capacity Utilization (FY24): 87%
- Croptek Sales Volume Growth (FY24): 11%
- Smartek Sales Volume Growth (FY24): 10%
- Bulk Fertilizer Sales Growth (FY24): 1%
- Bulk Manufacturing Capacity Utilization (Q4): 58%
- Bulk Manufacturing Capacity Utilization (FY24): 55%
- Ammonia Plant Capacity Utilization: 90%-plus
- Dividend: INR 8.50 per equity share (85%)
Release Date: May 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Deepak Fertilisers & Petrochemicals Corp Ltd (BOM:500645, Financial) achieved a Q4 EBITDA margin of 21%, one of the highest in the last five years.
- The TAN mining chemical business delivered the second-highest volume in its history.
- The IPA business saw a significant rebound with a 144% year-on-year increase.
- Crop-specific Croptek fertilizer grew by 11% despite adverse weather conditions.
- ICRA reaffirmed the company's long-term and short-term ratings, reflecting confidence in its financial stability.
Negative Points
- The company faced strong headwinds in all three of its business segments, including cheap imports from Russia and China.
- Unusually low and erratic rains impacted the fertilizer business, leading to almost drought-like conditions in some states.
- The company had to accommodate a large one-time subsidy hit and stabilization costs for the new ammonia plant.
- The industrial chemicals segment faced challenges due to an extended shutdown of the Dahej plant.
- Despite the positive outlook, the company has a significant debt load, with net debt at INR 3,400 crores and upcoming CapEx commitments.
Q & A Highlights
Q: On the ammonia front, now that the plant has stabilized, how should we look at profitability given current pricing dynamics?
A: (Deepak Rastogi, CFO) The ammonia pricing for FY24-25 is expected to be around $400 to $450. The plant's profitability is not solely dependent on ammonia prices due to our gas contract, which determines the cost price. We are optimistic about a good year for the business.
Q: How much did ammonia contribute to overall revenue and profitability in the last quarter?
A: (Deepak Rastogi, CFO) The revenue from ammonia was close to INR600 crores in the last quarter.
Q: How will the company fund the INR4,000 crores CapEx for TAN and nitric acid projects given the current debt levels?
A: (Deepak Rastogi, CFO) The net debt is INR3,400 crores. Funding for the Gopalpur project (INR2,200 crores) is already secured, and bridge funding for the Dahej expansion (INR1,950 crores) is in place. We expect EBITDA to grow, making us confident in managing these investments.
Q: What is the expected export mix for TAN this year?
A: (Deepak Rastogi, CFO) The quota for TAN exports is around 21,000 tonnes for the year, out of a total sales volume of 500,000 to 550,000 tonnes. We hope the government will relax these quotas in the future.
Q: Are we on track to commercialize the new nitric acid plant by H2 2026?
A: (Deepak Rastogi, CFO) Yes, we are on track. Last year, we incurred INR16 crores in CapEx, and we expect to incur around 40% of the overall project cost this year.
Q: Why have TAN imports from Russia reduced, and how sustainable is this trend?
A: (Deepak Rastogi, CFO) The Russian government has banned exports from St. Petersburg due to the ongoing war with Ukraine. Additionally, last year's imports were an aberration due to lower rains and pricing effects. We expect the trend of reduced imports to continue.
Q: What was the average gas cost during the quarter, and how much in incentives was recognized?
A: (Deepak Rastogi, CFO) The average gas cost was around $13.3 to $13.5. We recognized incentives of approximately INR75 crores to INR80 crores for the full year.
Q: What is the expected utilization rate for the crop nutrition and nitric acid segments?
A: (Deepak Rastogi, CFO) Nitric acid utilization is close to 100%. For crop nutrition, we expect utilization to be around 60% to 70%, potentially higher, depending on the monsoon.
Q: What is the expected timeline for the Gopalpur and Dahej expansion projects?
A: (Deepak Rastogi, CFO) Both projects are expected to come online in H2 2026.
Q: How much CapEx has been incurred for the Gopalpur TAN project to date?
A: (Deepak Rastogi, CFO) We have incurred close to one-third of the total project cost, which is around INR2,200 crores.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
