Deepak Fertilisers reported a challenging Q3 FY26, influenced by unseasonal rains and geopolitical factors. Revenues grew by 12% Y-o-Y for the year-to-date, but PAT declined by 4%. The company is nearing completion of the Gopalpur TAN and Dahej acid projects, expecting contributions in the next year. It also anticipates advantages from its long-term LNG contract with Equinor. The focus remains on specialty products and customer engagement.
Financial Performance Overview
For Q3 FY26, Deepak Fertilisers reported consolidated operating revenue of INR 2,830 crores, reflecting a 10% Y-o-Y growth, primarily driven by the Crop Nutrition Business (CNB). Year-to-date revenue reached INR 8,495 crores, a 12% Y-o-Y increase. Adjusted PAT for Q3 was INR 141 crores, a 34% Y-o-Y decline after normalizing for a onetime tax credit. The net debt-to-EBITDA ratio stands at 2.27x.
Segment Highlights
In Mining Chemicals, Q3 volumes were largely flat Y-o-Y due to extended monsoons and softer coal demand, but the B2C segment grew 26% Y-o-Y. Total Technical Ammonium Nitrate (TAN) volume grew 11% Y-o-Y year-to-date. Isopropyl Alcohol (IPA) volume declined 26% Y-o-Y, attributed to a planned shutdown and weaker acetone prices. In Crop Nutrition, CNB revenue grew 26% Y-o-Y in Q3, with specialty fertilizer and Croptek contributing 30% of CNB revenue.
Project Updates and Future Outlook
The Gopalpur TAN project is approximately 91% complete, and the Dahej acid project is around 79% complete. Both projects are expected to contribute to the bottom line in the next year. The company expects mining activity to recover with normal weather conditions, increasing demand for TAN and nitric acid. A new Equinor contract is expected to reduce gas pricing significantly.
Strategic Initiatives
The company is focused on strengthening direct sales, expanding regional warehousing, scaling exports, and deepening customer engagement. Efforts are directed towards application-led segmentations and strengthening solution-based customer engagement in the Nitric Acid business. Favorable reservoir levels and healthy farmer sentiment position the company well for the Rabi 2026 season.
Ammonia and TAN Market Dynamics
The company estimates a 6% compounded average growth rate for TAN products over the next 5-6 years, driven by mining and infrastructure. It expects domestic capacities to reduce the reliance on approximately 4 lakh tons of ammonium nitrate imports. The Dahej-II plant is expected to come online towards the end of Q1, with almost 70% of its capacity tied up with long-term CNA capacities.
Source: BSE
