Delivering Resilient Performance amidst Challenges in Q4FY24 and FY24

Leave a CommentDelivering Resilient Performance amidst Challenges in Q4FY24 and FY24Business

Pune, India, May 30, 2024: Deepak Fertilisers and Petrochemicals Corporation Limited, one of India’s leading producers of industrial chemicals and fertilisers (“DFPCL” or the “Company”), announces its results for the fourth quarter and fiscal year ended March 31, 2024.

Consolidated

(INR CR)

 Q4FY24 Q3FY24 QoQ Change Q4FY23 YoY Change FY24 FY23 YoY Change
Operating Revenue 2,086 1,853 12.6% 2,796 (25.4%) 8,676 11,301 (23.2%)
Operating EBITDA 438 282 55.2% 469 (6.7%) 1,287 2,165 (40.6%)
Margins (%) 21.0% 15.2% 576 bps 16.8% 421 bps 14.8% 19.2% (433 bps)
Net Profit 220 61 262.8% 257 (14.7%) 457 1,221 (62.5%)
Margin (%) 10.5% 3.3% 726 bps 9.2% 132 bps 5.3% 10.8% (553 bps)

 

The year saw challenges in all segments i.e. fertilisers due to below normal monsoon, short-term aberration in the import of fertilizer-grade ammonium nitrate from Russia and import of Nitroaromatics from China, despite which the company demonstrated resilience and delivered sustained performance.

 

Key Highlights from Q4FY24 and FY24:

  • Revenue Growth:  During Q4FY24, revenues grew by 12.6% QoQ basis. For FY24, the company reported consolidated operating revenue of INR 8,676 Cr.

 

  • EBITDA margin improvement: As the Raw Materials and the Finished products prices came down from the post Covid peaks, the revenue/top-lines receded. However, the overall EBITDA margins of the quarter rose from 16.8% to 21% and the annual margins were lower only thanks to the large one-time subsidy adjustment.

The improving trend is also apparent from the Q3FY24 to Q4FY24 margins showing smart upswings of 576bps reaching 21% EBITDA margins versus 15.2%.

 

  • Segment Performance:
    • FY24 Chemicals Segment revenues de-grew by 25% YoY with sustainable segment margins of 26%.
    • FY24 Fertilisers Segment revenues dropped by 21% YoY, segment margins were impacted on account of one-time subsidy of 267 Cr and weak monsoon.

 

  • Reduction in key RM Prices during FY24 has resulted in lower NSP:  Ammonia ▼ ~46% YoY; Phos Acid ▼ ~37% YoY; RGP ▼ ~15% YoY; MOP ▼ ~25%, Gas ▼ ~22%

 

  • Net Debt of Rs. 3,426 Cr with Net Debt / Equity of 0.63x (FY22: 0.48x), increased due to long term project debt and working capital needs.

 

  • Ammonia project commissioned in Aug 23, has achieved 100% designed production capacity.

 

  • CRISIL has recently assigned a ‘Short Term’ Credit Rating of A1+ to DFPCL and MAL (Highest rating). ICRA has reaffirmed DFPCL & MAL ‘Long Term’ Credit Rating to AA- with Stable outlook and ‘Short Term’ Credit Rating is also reaffirmed to A1+ (Highest Rating).

 

  • Promoters Pledge: As of March 31st, 2024, there is no encumbrance of any kind on Promoter’s holding, ensuring stakeholders’ confidence in the company’s strong financial position.

 

  • Dividend: The Board has recommended a dividend of Rs. 8.5/- per equity share of Rs. 10/- each (85%).

 
 

 

Commenting on the performance, Mr. Sailesh C. Mehta, Chairman & Managing Director:

 
The company has shown resilience and strategic focus despite the Chemical and Fertilisers segment facing challenges simultaneously. Short-term aberration in the import of fertilizer-grade ammonium nitrate from Russia, low cost Nitroaromatics from China and below normal rainfall in our core markets impacted business performance.  Despite the odds the company has delivered healthy performance with sustained margins, driven by innovation, operational excellence, and sustainability.

We have entered into a 15-year long-term gas supply agreement with Equinor, commencing in May 2026. This move will ensure continuous supplies of Natural Gas and is expected to improve margins through effective natural gas/LNG hedging and in-house ammonia production, ensuring greater stability.

We also signed a Commercial agreement with Haifa Group, a renowned multinational corporation specializing in Specialty Crop Nutrient. The MAL-Haifa offerings will support agricultural practices that counter the vicious trend of water scarcity and also enhance Nutrient Uptake & Use Efficiency in the plants.  This will directly help  achieve our Prime Minster’s dream of “More Crop Per Drop”.

For FY 24-25, the demand outlook for all our business segments looks positive. ‘IMD’ has forecasted above average normal rainfall in FY25, expecting a good Kharif and Rabi season this year.

Mining  Chemical business  volume growth is expected to continue in FY25. Further, the business has demonstrated capability  to deliver Total Cost of Ownership (TCO) projects across mining & infrastructure end-users customers and is in process to become a holistic mining solutions provider in India. This will help sustain margins and customer stickiness.

As we navigate through evolving market dynamics, we remain steadfast in our commitment to creating long-term value for our stakeholders while upholding the highest standards of corporate governance and sustainability.

                     

 

 
  • Mining Chemicals (Technical Grade Ammonium Nitrate):
  • Technical Grade Ammonium Nitrate Business demand showed healthy growth trends with Coal production growing at 11% YoY and 23% QoQ and Cement production growing at 10% YoY and 16% QoQ.
  • Technical Grade Ammonium Nitrate sales volume in Q4 grew by 26% YoY and 39% QoQ due to improved demand and coupled with low imports, particularly from Russia as it was short-term aberration.
  • The Company continues to maintain a competitive pricing strategy across all segments, underscoring the company’s strategic positioning in the market.
  • Post demerger of Technical Grade Ammonium Nitrate business into a separate legal entity, it will establish itself as a fully integrated, unique value chain offering mining solutions in India.
  • Business Outlook: Growth in demand is expected to continue druing FY25 as the demand for coal mining, Power and Infrastructure spend is likely to remain high due to the strong demand for power and the Government’s spending on infrastructure projects..
  • Pharma / Specialty Chemicals (Nitric Acid and IPA): 
  • Nitric Acid volumes in Q4 degrew by 27% YoY and 25% QoQ due to extended plant shutdown at Dahej along with low demand from downstream industries due to imports from China.
  • Our thrust for speciality Pharma-grade IPA continues on a positive journey, with volumes increasing by 26% quarter-on-quarter in Q4FY24, supported by higher prices.
  • Steel grade Nitric acid has witnessed positive customer response since its commercial launch.
  • Business Outlook:Nitric acid prices are expected to remain stable and improve over few quarters. Propylene based IPA would continue to perform better from demand and price perspective. Further, various trials at customers end are being conducted for Steel grade nitric acid and we expect  expansion of volumes.

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