Chambal Fertilisers hits record high on healthy outlook; up 64% in 1 year

Chambal Fertilisers and Chemicals share price hit a new high of Rs 588.55, gaining 3 per cent on the BSE in Thursday's intraday trade

Chambal Fertilisers and Chemicals share price hit a new high of Rs 588.55 today, gaining 3 per cent on the BSE in Thursday's intraday trade, on expectations of a healthy revenue growth ahead. In the past two trading days, the stock of the fertilizers company has rallied 10 per cent. Besides, in the past one year, it has outperformed the market by zooming 64 per cent as compared to 0.40 per cent decline in the BSE Sensex.

 

Chambal Fertilisers is a large manufacturer of Urea, and markets bulk fertilisers such as Di-Ammonium Phosphate (DAP), NPKs and Muriate of Potash (MOP). Reliable supply channels, established marketing network, and financial strength, offer an opportunity to grow the volumes of bulk fertilisers, Crop Protection Chemicals (CPC) and Speciality Nutrients (SN) business.

 

The company is focused on achieving growth in its existing marketing territory and geographical expansion of the marketing network. In addition to the above, Chambal Fertilisers has an opportunity to achieve growth by way of adding new products, especially in the CPC and SN business. The new territories, according to the management, have sizable demand for NPK fertilisers, CPC and SN, which gives opportunity to the company to grow. The company's focus on product quality and high level of customer satisfaction is likely to deliver positive results in the future.

 

The new urea plants, which have become operational in India under New Investment Policy 2012, have significantly narrowed down the demand-supply gap of Urea in the country. While these plants are located in the eastern and southern parts of India, the company concentrates its supplies of Urea in the northern and central parts of India. The additional supply of Urea from these new plants of other companies would mainly replace the imported Urea, the management said.  READ: Route Mobile zooms 12% on partnering with Nokia to offer network APIs

 

The strong demand of Chambal Fertiliser's products in the market, geographical expansion of marketing territory, diversification of business through implementation of Technical Ammonium Nitrate (TAN) plant, and the timely release of subsidy by the Government of India gives leg room for growth of the company.

 

Consistent performance of Urea business shall continue to give stability to the business. Geographical expansion, and deeper penetration in existing marketing territory shall enable the company to achieve sustainable growth in non-urea fertilisers, CPC and SN space, it added.

 

Meanwhile, in the October-December quarter (Q3FY25), Chambal Fertilisers reported mixed earnings, with the topline coming in better than analysts' estimates due to higher traded volumes. Earnings before interest, tax, depreciation and amortisation (Ebitda), however, was lower-than-anticipated due to subdued profitability on traded fertilizer.

 

The persisting concern about Chambal Fertilisers is Ebitda erosion post expiry of benefits for its G3 plant at Gadepan in Rajasthan in December 2026. The management is focused on growing the business through investments in TAN plant, and investment in capacity expansion of the Phosphoric acid plant through the Moroccan JV (Indo Maroc Phosphore SA, IMACID), said analysts at Elara Capital in their Q3 result update report.

 

The brokerage firm expects the Department of Fertilisers to come out with some clarity on normalised return parameters for the company's G3 Urea plant post the expiry of benefits in the next 12-15 months.  READ: REC, RBL, PNB: Bank, NBFC stocks rally as RBI to inject Rs 1.9trn liquidity

 

Analysts believe Chambal Fertilisers continues to report healthy growth in Crop Protection Chemicals and Specialty Nutrients (CPC & SN), led by geographical expansion and product launches. Fertilizer, which is a large part of the current business, is on solid footing but lacks growth drivers. Investment in TAN and proportionate share of investment in the 0.2 million tonne phosphoric acid expansion project (of the Moroccan JV) has eased concern on capital allocation, the brokerage firm said.