Gujarat State Fertilizers & Chemicals Limited (GSFC) has posted Q3 FY25 net profit at Rs. 119 crore as compared to Rs. 112 crore in Q3 FY25. The company posted operating revenue of Rs. 1,626 crore in Q3 FY25 as compared to Rs. 1,221 crore in Q3 FY24.

The company achieved robust earnings and revenue during the reporting period. The external environment and input costs presented a mixed package. The cost of essential inputs, including sulphur, sulphuric acid, and P2O5, increased in Q3 and 9M YoY. The Capro-Benzene spread decreased from $674 per MT in Q3 23-24 to $588 per MT in Q3 24-25. On the other hand, the cost of natural gas decreased by 10% year over year in the third quarter and maintained its level for nine months. Increased capacity utilisation and product mix optimisation towards more profitable Fertilisers and Industrial Products contributed to the company's success.

In Q3, the top line increased by 42% year over year, primarily due to an increase in DAP trading revenues. Fertiliser output increased by 23% (+0.77 lakhs MT) in Q3 YoY, while sales volume increased by 25% (+1.24 lakhs MT). Operating efficiency improved marginally from 8.52% to 9.16% and operating profit increased by 43% from Rs. 104 Cr. to Rs. 149 Cr.

During the nine months spanning April to December, turnover increased by 8% YoY despite substantial decrease in subsidy rates for P&K fertilizers. Fertilizer output increased by 18% (+1.98 lakh MT) and sales volume increased by 5% (+0.75 lakh MT). Operating efficiency increased from 10.95% to 12.41%, while operating profit increased by 21%, from Rs. 458 crore to Rs. 555 crore in 9M YoY.

Outlook:

With favorable conditions reported for Rabi crops across major states, the country is poised for another strong harvest season. However, the fertilizer industry faces challenges due to price constraints, global supply conditions and subsidy structures impacting production and imports. Additionally, the depreciation of INR poses cost pressures on imports. While demand for fertilizers, including Urea, has largely been met, limited requirements for crops like Sugarcane and summer-sown varieties are expected in small pockets during February-March. The company’s focus will be on optimizing sales opportunities and ensuring strategic stock placements for the upcoming Kharif season. A stable pricing environment for phosphatic fertilizers, along with potential policy interventions, will play a key role in shaping procurement strategies. Considering the market dynamics and planned annual shutdown of key fertilizers plants such as APS and energy revamp exercise in case of Urea, we have a target to book sales in the range of 3.0 to 3.25 LMT in Q4 24-25.

On the industrial products front, Caprolactam market is expected to remain under pressure due to rising Benzene prices and capacity expansions in China. Additionally, demand from key downstream sectors, particularly Nylon Tyre Cord, may remain soft due to rising inventories and an anticipated increase in imports from China. Melamine demand from Laminates, MDF, and Plywood sectors is likely to remain stable. For molding and compounding grades steady demand from the automobile, electrical, and electronics sectors should support sales. Pricing for major Industrial products is likely to be affected by cheap Chinese imports. Overall, the company expects stable demand and turnover in the Industrial Products segment in Q4 FY24-25.