CHAMBLFERT - Chambal Fertilisers & Chemicals Ltd Share Price

Chambal Fertilisers and Chemicals Limited provided a positive outlook during the earnings call for Q4 and FY2025. The company's standalone revenue for the quarter stood at Rs. 2,449 crore, a 16% increase from Rs. 2,114 crore year-over-year. For the full fiscal year, the company reported EBITDA of Rs. 2,838 crore, up 17% from Rs. 2,428 crore, and a profit after tax (PAT) of Rs. 1,657 crore, indicating a growth of 24% compared to Rs. 1,331 crore in FY2024.

Management highlighted several key points for future growth and prospects:

1. Urea Production and Sales: Urea production volume was strong at 34.61 lakh metric tons, with sales achieving 34.71 lakh metric tons. Despite some plant shutdowns, production efficiency was maintained, and further energy efficiency projects are planned.
2. CPC-SN Growth: The Crop Protection Chemicals "“ Specialty Nutrients (CPC-SN) business experienced significant growth, with Q4 revenues at Rs. 39 crore versus Rs. 15 crore in the previous year, contributing to a total revenue of Rs. 926 crore for the year. The management expects a compounded annual growth rate (CAGR) of 25% in this segment.
3. New Product Development: There was the introduction of 12 new CPC products and plans to launch 18 more in the upcoming kharif and rabi seasons. A focus on biological products is also underway, anticipating 8% of CPC-SN revenue to come from biologicals.
4. Technical Ammonium Nitrate (TAN) Plant: The TAN project is expected to be operational by January 2026, with planned revenues from this plant contributing significantly in future quarters.
5. Capex Plans: For FY2025-26, the estimated capital expenditure is projected at Rs. 1,200 crore, focusing on several growth initiatives.
6. Market Strategy: Management is optimistic about DAP imports and is strategically positioned for a strong kharif season, projecting robust growth in NPK and DAP trading.

Overall, Chambal Fertilisers is positioned for growth, driven by operational efficiencies, new product developments, and strategic market positioning.

Major Questions and Detailed Answers from the Q&A Section:

1. Question: Jignesh Kamani asked about the DAP import scenario and its potential recovery based on subsidy rates.

Answer: Yes, we currently have contracted approximately 1,30,000 tons of DAP including TSP. With government adjustments leaning towards a cost plus model, we foresee an ability to increase our volumes if this policy persists. This is contingent upon geopolitical factors, but we are optimistic about surpassing last year's import volumes.

2. Question: Jignesh Kamani inquired about the impact of DAP availability on NPK volumes.

Answer: The impact on NPK could be minimal as certain grades are crop-specific, while others are direct substitutes for DAP. High potash grades tend to remain in demand regardless of DAP pricing, as some grades are priced competitively and have a dedicated market.

3. Question: Vedant Sarda asked about growth drivers and capacity expansions in the urea segment.

Answer: We are continuously exploring projects to enhance capacities and efficiency. In FY '25, we boosted urea production by about 0.80 lakh tons, reaching 34.6 lakh tons. Our technical ammonium nitrate plant is slated to start operations in January 2026, contributing revenues in Q3 or Q4.

4. Question: Harmish Desai requested the total CAPEX for FY '25 and guidance for FY '26.

Answer: Our FY '25 CAPEX was around Rs. 300 crore. In FY '26, we anticipate total CAPEX of approximately Rs. 1,200 crore, primarily due to the technical ammonium nitrate project.

5. Question: S. Ramesh asked about the drivers for improved margins in the crop protection segment.

Answer: Our sales efficiency and strategic alliances have been vital for maintaining margins. Fresh product introductions also significantly contribute to our pricing power, allowing us to address farmer pain points effectively.

6. Question: CA Ashok Jain expressed concern about low profitability in the complex fertilizer segment.

Answer: Our current low profitability results from strategic stock purchases impacting segment assets. Sales volume and production disruptions due to plant shutdowns contributed to decreased margins, and future sales will likely rectify this.

7. Question: Deekshant asked about how geopolitical changes might affect supply chains and margins.

Answer: While fluctuating supplies from China could impact sourcing costs, we remain confident in alternative geographies. Margins will depend heavily on our strategic procurement decisions rather than external supply fluctuations.

8. Question: Sandeep Mukherjee queried about ammonia sales figures.

Answer: We sold approximately 1.03 lakh metric tons of ammonia, typically at prices ranging from Rs. 40,000 to Rs. 45,000 per ton.

9. Question: Manish Mahawar requested details on potential fixed cost reimbursements from the government.

Answer: This discussion is ongoing, and the last adjustments were noted around 2002-2003 with some ad hoc increases in 2014. Current deliberations are exploratory.

10. Question: Manish Mahawar asked if the company intends to pursue export opportunities in the crop protection sector.

Answer: We continue to explore export possibilities but face challenges in cost-benefit analyses. Previous evaluations have indicated lower returns compared to domestic operations, although we are open to viable opportunities in the future.

This represents the major questions and structured responses during the Q&A session of the earnings call. Each response focuses on conveying clarity about the company's strategies, expectations, and operational details while providing necessary numerical figures and forward-looking insights.