Deepak Fertilizers and Petrochemicals

Deepak Fertilizers and Petrochemicals Corporation ltd –

Company Profile –

Largest producer of – Nitric Acid, Iso Propyl Alcohol, Bentonite Sulphur, water soluble fertilisers in India

Only manufacturer of – Prilled Technical ammonium nitrate solids, Nitrogen:Phoshporous Prill 24:24:0 fertilisers, crop specific NPK micronutrients with nutrient unlock technology

A leading manufacturer of – Liquid CO2 and Methanol in India

Own and operate the largest home furnishing and furniture retailing mall in India – Creaticity Pune

Q1 FY 25 results and concall highlights –

Revenues – 2281 vs 2313 cr
EBITDA – 464 vs 281 cr ( margins @ 20 vs 12 pc – a steep jump )
PAT – 200 vs 114 cr

Application of company’s products –

Ammonium Nitrate – Mining and Infra explosives – account for 44 pc of company’s revenues

Industrial chemicals like – Varieties of Nitric acid ( diluted, concentrated ), Isopropyl alcohol, liquid CO2, Methanol etc are used in sectors like – Pharma, Nitroaromatics, consumer care, chemical derivatives – account for 18 pc of company’s revenues

Crop Nutrition – NP Prill 24:24:0 and NPK fertilizers, Bentonite Sulphur crop nutrients, speciality and water soluble fertilisers – account for 43 pc of company’s revenues

Product wise breakup of revenues –

Mining chemicals – 644 vs 541 cr
TAN – 137 vs 111 KMT

Industrial Chemicals – 405 vs 519 cr
Concentrated Nitric acid – 44 vs 51 KMT
Diluted Nitric acid – 21 vs 22 KMT
IsoPropyl Alcohol – 14 vs 16 KMT

Crop Nutrition – 977 vs 1069 cr
BenSulf – 10 vs 7 KMT
Traded products – 43 vs 72 KMT
NP + NPK fertilizers – 174 vs 156 KMT

Update on capex –

TAN project – Gopalpur – Greenfield project for production of 376 KTPA of TAN. Project cost – 2200 cr. Expected to be completed in H2 FY 26. Post commissioning, company will become third largest producer of TAN in the world

Nitric Acid – Dahej – expansion of Nitric Acid manufacturing capacity by 450 KTPA. Expected to be to completed by H2 FY 26. Post commissioning, company will become Asia’s largest producer of Nitric Acid

Good demand for Coal, Steel and Infra build up augurs well for company’s TAN business

Lower volumes in Nitric acid business due to ongoing repairs at company’s Taloja plant. IPA volumes were lower due to a planned shutdown

Good monsoons likely to augur well for company’s crop nutrients business going into Q2

Company’s captive ammonia plant running at 98 pc capacity ( started LY in Q2, 86 pc of the plant’s output is being used for captive purposes ). Having captive supply of this RM is a big risk mitigating factor for this company. The capacity of this plant is 500KMT

Out of an EBITDA of 464 cr, aprox 50 pc comes from TAN / Industrial or Mining Explosives business

Once the Gopalpur plant comes up, company may again have to buy ammonia from outside as it won’t be logistically possible to use captive Ammonia to make TAN at Gopalpur

Compny’s mining consultancy services is in niche stages. Once it becomes a material part of the business, company will start reporting its performance separately

At present, about 35 pc of country’s TAN requirements are met via imports ( mostly from Russia ). RCF and Chambal fertilizers are coming up with capacities to make TAN. Even after this, India won’t be self sufficient in TAN and there would still be residual need for imports

Capex lined up @ around 750 cr ( Gopalpur expansion ) + 750 cr ( Dahej expansion )

At present – no one else in India has a backward integrated ( making their own ammonia ) TAN business. That should be a key advantage for the business

Because of extensive mining and infra demands in India for next 5-10 yrs , this business has very good demand drivers

Disc: fresh entry, tracking position, not SEBI registered, not a buy/sell recommendation, biased