Metrics cut 1
- FY27 revenue growth guidance cut to 30–35% YoY (from 35–40% previously)
Krishana Phoschem Limited - Q1 FY27 Earnings Call Summary Tuesday, July 14, 2026 4:00 PM IST
Event Participants
Executives
2
Anil Sharma, Praveen Ostwal
Analysts
10
Ajit Sethi, Anuj Arya, Anuj Heria, Archit Agarwal, Dhwanil, Harsh, Lohit Saini, Nishika Sanklecha, Parth Sodha, Rishi Mehta
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from operations | ₹532 crore | +35% YoY; QoQ down ~30%, driven by normal seasonality (Q4 is structurally stronger than Q1). Trading contributed ₹173 crore; manufacturing ~₹359 crore. |
| Fertilizer production | 89,747 MT | NPK-DAP 53,500 MT and SSP 36,300 MT; output was constrained by raw material availability and NPK grade changeovers. |
| Trading volumes | 21,000 MT | Imported products packed and sold alongside manufactured fertilizers; earns EBITDA margin of 7–8%. |
| Capacity utilization | NPK-DAP 43%; SSP 121% | NPK-DAP ramp-up was limited by raw material shortages; SSP ran beyond rated capacity. |
| EBITDA | ₹89 crore | +36% YoY; margin ~16.7%, up from ~12% in the preceding quarter. Supported by new NPK grades, carry-forward lower-cost inventory and backward integration; manufacturing margin ~16%, trading 7–8%. |
| PAT | ₹47 crore | +54% YoY; PAT margin 8.9%, down QoQ from 11% as depreciation rose from ₹8.7 crore to ₹13 crore and finance costs from ₹13 crore to ₹20 crore on new capacity. |
| EPS | ₹1.52 | vs ₹0.99 in Q1 FY26 (post 5:1 stock split, face value reduced from ₹10 to ₹2). |
| NPK-DAP installed capacity | 495,000 MT | Existing 330,000 MT plus new 165,000 MT commissioned in the previous quarter. |
| Sulphur price (key input) | ~₹1 lakh/tonne (Jun–Jul) | Up from ₹65,000–70,000/tonne in April due to Strait of Hormuz disruption; refinery production lean. |
Geographic & Segment Commentary
Manufacturing – SSP & NPK-DAP: SSP delivered 121% capacity utilization with 36,300 MT volume, while NPK-DAP ran at 43% (53,500 MT) due to raw material constraints and grade switching. New complex fertilizer grades improved product mix and lifted manufacturing EBITDA margins to ~16%, with management expecting utilization to normalize from Q2 as raw material supply has smoothened.
Trading: Trading contributed ₹173 crore (~33% of revenue) at 7–8% EBITDA margin. Management characterized imports as complementary to manufactured products, improving farmer access and soil nutrition; trading will continue wherever demand exists, despite being margin-dilutive.
Company-Specific & Strategic Commentary
Product Portfolio Expansion: Launched five new complex fertilizer grades — 12:32:16, 16:20:0:13, 15:15:15, 8:21:21 and 9:24:24 — to address crop- and soil-specific nutrient needs; new grades were a key driver of Q1 EBITDA margin expansion and are expected to support sustainable volume growth.
Share Capital Optimization: Executed a 5-for-1 stock split (face value ₹10 to ₹2) to improve liquidity, retail affordability and broaden the shareholder base.
Green Ammonia Sourcing Agreement: Signed a 10-year, 70,000 MTPA green ammonia agreement with SECI (third-party capacity). Pricing will be the lower of the contractual price or international grey ammonia price, positioning the company as the lowest-cost green ammonia buyer; contribution expected from FY29.
Capacity Expansion Evaluation: Management is evaluating further capacity expansion opportunities; proposals are not yet Board-approved and will be publicly disclosed once finalized.
Government Support & Agri Fundamentals: Higher MSPs for all 14 Kharif crops for the 2026-27 season, continued NBS subsidy support, and the government's strategic natural gas storage initiative are expected to strengthen farmgate economics and fertilizer offtake.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY27 revenue growth | 30–35% YoY | Backed by smooth ramp-up of the new 165,000 MT NPK-DAP capacity over the remaining quarters; raw material availability has improved. |
| Quarterly revenue run-rate | >₹500 crore in Q2–Q4 FY27 | Based on combined NPK-DAP + SSP operations at planned utilization; management said this is "definitely" achievable. |
| Q2 FY27 capacity utilization | NPK-DAP utilization to exceed Q1 levels | Raw material issues resolved; production expected to operate at planned levels. |
| EBITDA margin | ~16% to sustain | Supported by new NPK variants, backward integration into sulphuric/phosphoric acid, and cost efficiencies. |
| Green ammonia contribution | FY29 onwards | 10-year, 70,000 MTPA agreement; pricing at the lower of contract vs international grey ammonia. |
| CAPEX | Under evaluation; not yet disclosed | New capacity expansion pending Board approval; disclosure will follow statutory approvals. |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia conflict / Strait of Hormuz disruption | Ongoing geopolitical uncertainty has raised freight costs, delayed vessels and pushed sulphur prices to ~₹1 lakh/tonne (from ₹65,000–70,000 in April); the route has reopened and closed intermittently. Management is mitigating via diversified sourcing, contracts with sulphuric acid manufacturers and its own sulphuric acid plant. |
| Raw material inflation and limited pass-through | Only ~25–30% of input cost inflation is being passed on via NBS subsidy support and MRP revisions; the balance is being absorbed through procurement discipline and inventory tactics. |
| Monsoon variability / Kharif demand | IMD forecast monsoon at 92% LPA; June rainfall was ~40% below normal, cutting Kharif sowing 22.7% YoY to 182.7 lakh ha. Early July revival reduced the deficit to ~24% and accelerated offtake; industry NPK sales still grew 33% YoY and SSP sales 28% YoY in Apr-May. |
| New capacity cost overhang | Depreciation and finance costs rose sharply (to ₹13 crore and ₹20 crore respectively) with the new NPK-DAP plant; margins could compress if utilization ramp-up is slower than planned. |
| Seasonality | Q1 is structurally weaker than Q4; sequential revenue comparisons will remain unfavorable in Q1 quarters. |
Q&A Highlights
Revenue Growth Guidance & Quarterly Run-Rate
- Question: Do you still expect 35–40% revenue growth? Will the company achieve ₹500 crore per quarter from the NPK-DAP facility? (Parth Sodha, Trinetra Asset Management; Nishika Sanklecha, Sapphire Capital)
- Answer: Management guided to 30–35% additional turnover over last year, backed by the new 165,000 MT capacity ramp-up. The >₹500 crore quarterly revenue potential refers to combined NPK-DAP and SSP operations, and the company expects to achieve that run-rate in the remaining three quarters of FY27. Raw material availability was the primary Q1 constraint and has now smoothened. (Praveen Ostwal)
CAPEX Plans
- Question: Any planned CAPEX in FY27? (Nishika Sanklecha, Sapphire Capital)
- Answer: Capacity expansion opportunities are being evaluated but are not yet Board-approved or publicly disclosed; details will be shared after statutory approvals. (Praveen Ostwal)
Revenue Mix & Cost Pass-Through
- Question: What was the trading vs manufacturing split, and how much of input cost inflation can be passed on? (Anuj Arya, Intergroup Services)
- Answer: Trading revenue was ₹173 crore at 7–8% EBITDA margin; manufacturing contributed the balance at ~16% margin. Only ~25–30% of the increase in input costs is being passed on, offset through higher subsidy support and MRP revisions. (Praveen Ostwal)
QoQ Revenue Decline & Seasonality
- Question: Revenue rose 34.6% YoY but fell ~30% QoQ — why? (Harsh, ABC)
- Answer: The decline is driven by normal business seasonality; Q4 is historically stronger than Q1, a consistent trend in the company's own historical performance. (Praveen Ostwal)
Peak Revenue Potential & Trading Mix
- Question: What revenue can the current asset base generate at 100% utilization, and will the ~33% trading share sustain? (Ajit Sethi, Ipro Quantum Solutions)
- Answer: At 495,000 MT NPK-DAP capacity (
₹60,000/tonne) plus SSP (₹20,000/tonne), revenue potential exceeds ₹3,000 crore. Trading will continue wherever it complements manufactured products and serves farmers, despite lower margins. (Praveen Ostwal)
EBITDA Margin Drivers & Sustainability
- Question: What drove EBITDA margin to ~16.7%, and is it sustainable given lower-cost inventory contributed? (Archit Agarwal, StepTrade Capital; Anuj Heria, Interglobe Services)
- Answer: Margin expansion came from new NPK grade sales, cost efficiencies, improved realizations and lower-cost carried inventory. Management is confident of sustaining ~16% margins, aided by backward integration into sulphuric and phosphoric acid. (Praveen Ostwal)
Receivables Collection
- Question: Update on the ₹700 crore receivable collection expected in Q1. (Archit Agarwal, StepTrade Capital)
- Answer: Debtors were ~₹300 crore at the end of the previous quarter; collections during Q1 exceeded ₹700 crore. (Praveen Ostwal)
PAT Margin Decline
- Question: Why did PAT margin fall from 11% to 8.9% QoQ despite better revenue and EBITDA? (Rishi Mehta, Individual Investor)
- Answer: Higher depreciation (₹8.7 crore → ₹13 crore) and finance costs (₹13 crore → ₹20 crore) from the newly commissioned plant compressed PAT margin; operating leverage should offset these costs as utilization improves. (Praveen Ostwal)
Green Ammonia Agreement
- Question: What is the financial benefit of the 10-year, 70,000 MTPA green ammonia agreement with SECI? (Rishi Mehta, Individual Investor)
- Answer: The capacity is third-party; the company will buy green ammonia at the lower of the contractual price or international grey ammonia price, making it the lowest-cost green ammonia buyer once the facility starts in FY29. (Praveen Ostwal)
Sales Volumes & Margin vs Peers
- Question: Can you share volume breakups, and why are our margins (
17%) higher than Paradeep/Coromandel (8–9%)? (Dhwanil, iWealth Fund) - Answer: Volumes were NPK-DAP 53,500 MT, SSP 36,300 MT and trading 21,000 MT. Superior margins reflect diversified sourcing, inventory management and operating practices that have consistently outperformed the industry over the last five years. (Praveen Ostwal)
Sulphur Price Outlook
- Question: What is the outlook on sulphur prices? (Lohit Saini, Vijayaram Wealth Managers)
- Answer: Prices moved from ₹65,000–70,000/tonne in April to ~₹1 lakh/tonne in June-July due to Strait of Hormuz disruptions; refinery production is lean. The company is optimizing between its own sulphuric acid production and external procurement contracts. (Praveen Ostwal)
Key Takeaway
Krishana Phoschem delivered resilient Q1 FY27 results despite severe input-cost and supply-chain headwinds: revenue grew 35% YoY to ₹532 crore, EBITDA rose 36% to ₹89 crore (16.7% margin), and PAT increased 54% to ₹47 crore, aided by new NPK grades, lower-cost inventory and backward integration. Production totaled 89,747 MT with SSP utilization at 121%, while NPK-DAP ran at only 43% due to raw material shortages and grade changeovers. The company launched five complex fertilizer variants, executed a 5:1 stock split, and is evaluating further capacity expansion. Management guided to 30–35% FY27 revenue growth, a >₹500 crore quarterly run-rate from Q2 onwards, and sustained 16% EBITDA margins as raw material supply normalizes. Key watch points include Strait of Hormuz-related sulphur price inflation (₹1 lakh/tonne), limited 25–30% cost pass-through, and higher depreciation/finance costs from new capacity, partially offset by improving monsoon conditions and MSP/NBS support.