CHAMBLFERT - Chambal Fertilisers & Chemicals Ltd Share Price

Chambal Fertilisers and Chemicals Limited reported robust financial performance for the quarter ended June 30, 2025. The management highlighted a standalone revenue of Rs. 5,698 crore, with EBITDA at Rs. 929 crore and a profit after tax (PAT) of Rs. 638 crore, marking a year-on-year growth of 16%. Consolidated PAT rose to Rs. 549 crore, representing a 23% increase from Rs. 448 crore last year.

Looking ahead, the management provided insights on operational expectations and future growth. They anticipate a substantial demand for urea and P&K fertilisers, owing to favorable subsidy receipts and a strong sales volume of P&K fertilisers at 4.21 lakh metric tons"”up 70% year-on-year. Urea production volumes were noted at 8.54 lakh metric tons, though lower than the previous year's 9.03 lakh metric tons due to maintenance issues with the Gadepan-II plant.

Management expects the ongoing Technical Ammonium Nitrate (TAN) project to commence trial production by December 2025, with a commercial launch anticipated by mid-January 2026. They estimate an initial production of about 55,000-56,000 tons with a selling price around Rs. 35,000-40,000 per ton. The TAN project's total capital expenditure is projected at Rs. 1,645 crore, with Rs. 918 crore already spent.

In terms of strategy, the management emphasized the introduction of new products, including 13 new CPC (crop protection chemicals) products. They aim to deepen market penetration through partnerships and have initiated a seed business, generating Rs. 6 crore, targeting higher revenue in the upcoming rabi season. Management projects a revenue target of Rs. 1,500 crore in the CPC and specialty nutrient segments for FY26.

The company's intent to maintain efficient operations was also highlighted, with ongoing energy efficiency projects aimed at minimizing costs, despite upcoming revisions in energy norms. Management reassured that they are well-positioned amidst the evolving regulatory landscape and remain committed to improving productivity across all business segments.

1. Question: Considering the broader macro environment, where global fertilizer prices remain elevated, currency volatility persists, and the Department of Fertilizer policy shifts, how do you expect this to influence your urea and P&K fertilizer margins and volume for the rest of the year?

Answer: I see urea margins stabilizing as they're formula-related, while for NPK, we'll need to strategize purchases based on subsidy and market MRP. Prices have risen recently, showing potential signs of abating, but we are adequately stocked to manage this.

2. Question: Could you unpack the respective contribution of CPC-SN versus biological versus seed segments?

Answer: The contributions from CPC-SN, biologicals, and seeds are similar, each varying by about 2-3%. They all show strong performance, with our holistic agribusiness strategy positively impacting each segment.

3. Question: What is your expectation from NBS subsidy in H2? What traded fertilizer volumes can we see this year?

Answer: With the government moderating DAP and TSP prices, we expect to trend back to original numbers over a million tons. Our projections for traded volumes should align with this recovery trajectory.

4. Question: What are your plans for the Technical Ammonium Nitrate (TAN) project and its expected trial production?

Answer: We aim to commence trial production by early December, with full operational capacity by mid-January. Current project spending stands at Rs. 918 crore, with a remaining balance of Rs. 300-400 crore.

5. Question: What is the predicted EBITDA per ton for TAN based on current realizations?

Answer: Currently, we expect an EBITDA margin in the range of Rs. 35,000 to Rs. 37,000 per ton, potentially achieving five-digit positive figures depending on market conditions.

6. Question: What are the conditions surrounding the new energy norms for urea, and what changes are expected?

Answer: The recent modifications to energy norms were the first in about seven years, leading to minor adjustments. However, while norms will continue to evolve, we've factored the reduced impact of these changes into our current calculations.

7. Question: Can you share your production volumes for Gadepan plants this quarter?

Answer: For this quarter, Gadepan-I produced approximately 2.9 lakh tons, Gadepan-II about 2.15 lakh tons, and Gadepan-III yielded around 3.5 lakh tons. Total ammonia sales reached around 23,000 tons.

8. Question: What is the market size of your newly ventured seed business and your growth ambitions?

Answer: We are primarily focusing on hybrids, targeting Rs. 6 crore in initial sales with ambitions for much higher in the coming rabi season. The total market size is estimated at Rs. 50,000 crore, encompassing various seed categories.

9. Question: Can you provide insight on your CAPEX plans for this year aside from TAN?

Answer: Our ongoing CAPEX is about Rs. 250 crore, focused on normal replacement expenditures and necessary project progress spread across the year.

10. Question: How do you view the overall demand-supply dynamics for TAN in India, considering recent government export quotas?

Answer: The TAN market might see short-term supply surplus; however, with infrastructure pushes ongoing, demand is forecasted to grow at a CAGR of 5%-6%. Our exports will align with our scaling capabilities post the current project's implementation phase.