Deepak Fertilisers and Petrochemicals has seen its long-term credit ratings placed on watch with developing implications by ICRA. This action follows the ongoing conflict in West Asia, which has caused significant disruptions to natural gas supplies and pushed up global commodity prices. While the company faces short-term volatility, it remains focused on upcoming expansion projects, including the Equinor gas contract and new manufacturing facilities expected to improve profitability by FY2027.
Credit Rating Outlook Revised
Following a recent assessment, ICRA has placed the long-term credit ratings of the company on watch with developing implications. Additionally, the short-term rating has been withdrawn. These changes reflect the current geopolitical instability in West Asia, which has triggered supply chain constraints and increased price volatility for key inputs like ammonia, sulphur, and natural gas.
Operational Impact and Strategic Mitigation
The company remains exposed to short-term gas supply tightness which may affect ammonia production. However, strategic measures are in place to mitigate these risks. A new Equinor gas contract is set to commence in May 2026, which is expected to fulfill the entire gas requirement for Performance Chemiserve Limited and ease supply pressures. Furthermore, the company is moving forward with significant capital expenditure, with Rs. 2,936 crore already invested in major projects by the end of December 2025.
Growth and Expansion Plans
Despite the near-term challenges, the firm’s long-term outlook is supported by capacity expansions. New Technical Ammonium Nitrate (TAN) and nitric acid projects are scheduled to become operational by the end of Q1 FY2027. These initiatives are expected to enhance production efficiency and bolster the company’s competitive standing in the industrial chemicals market. Financial indicators remain stable, with FY2025 operating income reaching Rs. 10,274 crore and the company maintaining adequate liquidity to support its ongoing investment programs.
Source: BSE
