Crisil Ratings has revised the outlook on Deepak Fertilisers’ long-term bank facilities to Positive from Stable, while reaffirming the rating at Crisil AA-. The short-term rating and commercial paper programme are reaffirmed at Crisil A1+. The outlook revision reflects the expected improvement in operating performance, driven by expansion projects and healthy profitability across segments. Capacity expansion projects are expected to significantly add to the group’s operating performance from fiscal 2027 onwards.
Rating Outlook Upgrade
Crisil Ratings has upgraded the outlook for Deepak Fertilisers And Petrochemicals Corporation Limited (DFPCL) to Positive, with the long-term rating affirmed at Crisil AA-. The rating agency also reaffirmed the Crisil A1+ rating for the company’s short-term bank facilities and commercial paper. This revision signals enhanced confidence in DFPCL’s future financial health and operational efficiency.
Key Drivers for the Revision
The positive outlook is underpinned by the anticipated improvement in DFPCL’s operating performance. This is largely attributed to the expected ramp-up of ongoing expansion projects, particularly in the Technical Ammonium Nitrate (TAN) and Nitric Acid segments. These projects are slated to contribute significantly to the company’s performance from fiscal 2027 onward.
Project Progress and Financial Impact
The expansion projects are progressing well, with over 75% completion of the TAN project and over 50% completion of the nitric acid project. While the capital expenditure for these projects is significant, at approximately Rs 4,658 crore, Crisil Ratings expects the overall net debt to remain manageable, below Rs 4,500 crore in the near term.
Financial Performance Highlights
The company’s consolidated revenue increased to Rs 10,274 crore in fiscal 2025, with an operating Ebitda margin of 18.7%, compared to Rs 8,676 crore and 14.9%, respectively, in fiscal 2024. The TAN and industrial chemicals segments have shown healthy improvements in profitability, supported by higher volumes and a shift towards specialty segments.
Debt Reduction and Future Outlook
Net debt reduced to Rs 3,305 crore in fiscal 2025 from Rs 3,426 crore in the previous fiscal year. Crisil Ratings expects debt protection metrics to remain healthy, considering the company’s high accrual and anticipated improvements in margins and cash flows from the new capex starting in fiscal 2027.
Rating Rationale
The ratings continue to reflect the strong business risk profile, which includes a diversified product range encompassing Industrial chemicals (IC), TAN, and complex and specialty fertilisers. DFPCL maintains market leadership in TAN and key IC products like Nitric acid and Isopropyl alcohol (IPA).
Source: BSE
