Gujarat State Fertilizers & Chemicals Limited (GSFC) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Gujarat State Fertilizer and Chemicals Limited GFC Q4 FY26 Earnings Conference Call hosted by Anurag Service LLP Limited. From the management, we have Mr. S.K. Bajpai, Senior VP, Finance and Legal and CFO, and other senior members from the management. As a reminder, all participants will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. S.K. Bajpai, Senior VP, Finance and Legal and CFO, GSFC Ltd. Thank you, and over to you, sir.

Yeah, good afternoon, everyone, and thank you for joining us today on behalf of Gujarat State Fertilizers and Campus Ltd. I welcome you to discuss our performance in Quarter 4 and Financially at 25-26. I hope you had a chance to review the financial results. Media release and investor presentation available on the stock exchanges and also on our company's website. If you see stand-alone financial results, the financial year 25-26, the sales were recorded at 10,827 crore rupees, which is 15% higher than the last comparative periods. PBT and PET is also increased by 13% and 14%. to 838 crores and 652 crores. EPC consolidated financial performance, PCS is increased by 15% to 10,945 crores. PBT and FAT is increased by 14% to 861 crores and 673 crores respectively. Quarter 4 result. We discussed then we achieved highest ever quarter 4 sales of 2622 crores. We also recorded highest ever quarter 4 fertilizer sales of Rs. 1985 crore. Industrial product segment supported highest quarter 4 habit in the last 10 quarters. Maintained stable operations despite sharp volatility in global raw material prices arising from geopolitical disruptions. In case of financial year 25-26, shares increased by 15% by OBI from 9,429 crores to 10,827 crores. Operating EBITDA grew by 24% by OBI to Rs. 781 crores. PVD increased by 13% by OBI to Rs. 838 crores and PAD by 14% to Rs. 652 crores. Photographer sales volume increased by 12%. From 19.88 lakh metric ton to 22.31 lakh metric ton. Achieved highest fertilizer production in last 5 years at 17.59 lakh metric ton. IP segment delivered highest annual profitability of Rs. 200 crore in the last 4 years. We also capitalized major growth projects aggregating over Rs. 670 crore, strengthening operational efficiency and future growth readiness. The fertilizer segment delivered a strong operational and market performance during both quarter 4 and financial year 25-26, supported by robust demand conditions and higher subsidy support. During the year segment, sales increased by Rs. 1196 crores, while volume grew by 12% led by AS, APS, and DAP. Quarter 4 performance was particularly strong, with the company achieving its highest ever quarterly fertilizer sales. It provides significant escalation in prices of Kera materials, such as natural gas, ammonia, sulfur, and sulfuric acid. Due to geopolitical developments, the company maintained stable operations, optimized product availability, and achieved highest fertilizer production in the last five years. The industrial product segment demonstrated a strong turnaround and profitability improvement during Quarter 4, 25-26, and financially 25-26. The segment achieved its highest annual profitability in the last four years and highest quarter for EBIT in the last ten quarters. Revenue growth and margin expenses were primarily supported by higher bills of HF Pistol and traded ammonia, along with improved export opportunities in Malamai, aligned with the Government of India trade facilitation initiatives. While realizations in caprojectum and nylon products remained under pressure due to lower global spread, The segment benefited from improved product mix, operational efficiencies, and better market positioning across key products. We continue to maintain a strong balance sheet with no long-term debt, healthy net worth, and adequate liquidity. Government of India's outstanding support on release of fertilizer subsidy has kept the working capital levels at optimum level. As of date, the company has achieved subsidy dues for urea to 4th week of April 26. And PAK fertilizers up to 3rd week of April 26. It provides the foundation for the company to advance its CapEx plans aligned with the strategic growth roadmap. The company capitalized the project worth.

Ladies and gentlemen, the line for the management has been disconnected. Please wait while we reconnect them to the conference. Ladies and gentlemen, thank you for patiently holding. We have the management line reconnected. Over to you, sir.

So I will start from the outlook for quarter 1, 26, 27. The fertilizer segment heads into quarter 1, 26, 27 with raw material market still unsettled. Geopolitical pressures in the Middle East continue to drive input cost variability. On the policy side, government of India's revision of NBS rates for H1, 26, 27 with a 10% uplift across nitrogen. Phosphorus and sulfur nutrients signals a deliberate intent to protect curry season supply. We will manage our position accordingly, balancing of tech timing, inventory placement, and margins, while staying in step with the Department of fertilizer directives. Progress of the South Bay, Monsoon, and possible emergence of the Al-Nino conditions will remain key factor influencing demand outlook. In industrial product segment, the demand picture for quarter 1, 26, 27 is mixed and product specific. Caprolactam, benzene specs are expected to require during the quarter. However, the elevated caprolactam and nylon 6 prices levels. In the quarter 425-26 are unlikely to hold, leaving realizations under some pressure. Melamine and technical-grade urea face a softer demand environment, with downstream industries running at reduced rates against a backdrop of higher input costs. As a coastal domestic demand remains constant, agrochemical and related sectors continue to absorb the knock-on effects of the geopolitical situation. Though export volumes are expected to hold, across the remaining industrial products portfolio, demand is expected to track broadly at current levels through the quarter. I now turn over the call for questions and answers.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, to ask a question, you may press star and 1.

Ladies and gentlemen, anyone who wishes to ask a question may press star and 1 on the touchtone telephone.

First question is from the line of Saket Kapoor from Kapoor & Co. Please go ahead.

Yeah. Hello. Namaskar, sir. Namaskar, namaskar, sir. Sir, the premise of the question for investing committees and from my side in particular is only we want to understand as today's current environment, how is our organization shaped up and what should investors expect in terms of the business that they are in for a consistent set of numbers going ahead? Since a lot of surgeries are getting played out in the segment as a whole, especially the Thank you. So, if you could just glide through us how the management feels for the current financial year on top of the type of geopolitical circumstances, the supply chain issues, we depending a lot on the import part also. So, how are things shifting up and how is GSFC preparing itself to glide through this current financial year?

Okay, thank you, Saket. It is a very obvious question that current situation is very abnormal. As I have mentioned that the prices of raw materials like ammonia, sulfur, sulfuric acid, and other raw material inputs have increased many fold. So it is a difficult situation for the company as well as for the country. But fortunately, we are having the ammonia plant and sulfuric acid plant in our fertilizer nigger complex. So, we are getting ammonia manufactured through natural gas, and there is no much increase in the natural gas prices. It is controlled by government of India, and they are prioritizing fertilizer and other priority sectors for supply of natural gas and RNG. If any price increase in the natural gas, it is absorbed by the government of India by way of the subsidy. As for the sulfuric acid is concerned, the sulfur prices are presently at $850 in the international market. But we are having the sulfuric acid quantity available in our store, which is manufactured as per the old long-term contacts with the suppliers. So, fortunately, immediately there is no problem for the quarter one that we will be having any salt of sulfuric acid. But considering the overall situation of the raw material prices, we can only hope that the situation normalizes very soon, and we will be getting the raw material inputs for the fertilizer production at the competitive rates.

So, sir, can you give us the color on the number of days of inventories we are carrying and what is there in the pipeline currently in terms of refinishing the inventory that is getting consumed for the RM part? How is the pipeline currently shaping up?

Actually, ammonia, there is no problem. We are having 100% production at ammonia 4 and ammonia 3 plants. So, natural gas is supplied by the government constantly. So, ammonia, we are having the stock of around 16,000 mt. at our Baroda complex, and there is no price price expected in the natural gas price in the near future. For sulfuric acid, we have also the inventory up to the full level of the sulfuric acid tanks. So, whatever sulfur we are having as per the long-term contact from the solar reliance, Naira, BPCL and IOCL, we are getting the sulfur. However, it is also to say that we are not getting 100% supply and it is a very high rate. So, we are also trying to import sulfur from the international market at a competitive rate. So that we can continue our sulfuric acid production for meeting the requirement of ammonium sulfate and ammonium phosphate sulfate in the fertilizer number complex.

Sir, with respect to the trading for ammonia, are we in the process currently with the type of setup? Are we continuing with that, the trading aspect also?

Yeah, we are importing actually ammonia at our Sikka jetty. We are having our own jetty and storage facility at Sikka unit. So we are importing ammonia. Whatever ammonia quantity is required by the industries down the line, we are importing that particular portion in the whole segment for the trading papers, and we trade accordingly the ammonia from the jam vinegar plant.

Right, sir. Correct me here, sir. We were also looking for some retrofitting or some changes in specifications for our fertilizer plant so that we could have alternatively changed the mix of fertilizer. Correct me there. Where are we, sir, in terms of, I think there were two varieties of fertilizer which you were able to produce from the same unit by some minor changes? So, if you could just give us some understanding, and also for the current quarter, ensuring quarter, what is the outlook for both the segments?

Actually, there is one train of DAP at Chikka unit, which is having the production capacity of 1300 or 1400 WT10 per day. Okay, so that... We are trying to convert it for the fungible production facilities for other grade of NPKs like ammonium phosphate sulfate. So, we are, this work is going on nicely as per the scheduled time, and we are expecting this to be completed in July, somewhere in July or August this year only. So, after completing of this technical changeover, we will be able to produce either APS or DAP. from the DAP team.

All right. And to the second part of the question, sir.

What was that? Please repeat.

Yes, sir. My question was, how is the entering potter's proceeding with respect to both the segment, both fertilizer as well as the industrial segment, and are we running at optimum level?

Yes, as far as fertilizer is concerned, we are running at optimum level. There are some hiccups in the sulfur supply sometime, and we are maintaining our plant loads of ammonium sulfate to the maximum possible capacity. But whatever the lesser capacity we are producing, we are arranging from the international market. So we are getting the shipment of ammonium sulfate very soon in the shipment is under loading, and we will get the manufactured ammonium sulfate. In general, from very soon. So, there will not be any production deficiency in the current quarter. As far as IP product is concerned, industrial product segment is having a very positive tone. In the quarter fold, it is set up. And if you see the caproductum benzene spread, it is running more than $800 per metric ton today. which was around 670 metric ton per year, 670 dollar per metric ton in the quarter 4. So, it is nicely shaped up and industrial production cement will continue to perform in a better way in the coming quarter.

And my last question, then for the fertilizer, fertile margin, what should we pense in terms of the volume that we are expecting for the current year, and also the fertile margin that we should be on a blended basis, what should we model out?

It's very difficult to Changing very fast. The raw material price volatility is very high in the international market. However, I can say that DAP... There is no margin difference because it is fully protected by the government of India. Whatever additional cost in the gas or whatever protection additional cost we are incurring in the DAP manufacturing, that is reimbursed by the government of India by way of special practice. So, we are expecting to get this circular issued by the government of India very soon and it will be protected. So, margin will remain same as in the past. However, in case of NPK grades, There will be slight here and there because we had increased the price of APS and other NPGA grade. So, in that we may see plus minus 5 to 10 percent here and there in the margins. But whatever margin loss we will be having in the fertilizers will be compensated by the IP product segment. I have told that it is shaping up very nicely the prices of the chemical side. Right.

Thank you, sir, and all the best to the team. I'll join the team.

Thank you, sir. Thank you.

Thank you. Ladies and gentlemen, to ask a question, you may press star and 1.

Anyone who wishes to ask a question may press star and 1 on the touchstone telephone.

As there are no further questions from the participants, I now hand the conference over to Mr. S.K. Bajpayee from GSFC for his closing remarks. Over to you, sir.

Yes, thank you, participants. I hope that I have given the satisfactory answers, whatever is posed to me for the performance of this quarter, financial year, and the next quarter, coming quarter. And I thank you for associating with us in this conference. Thank you.

Thank you, sir. On behalf of GSFC Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.