Gujarat State Fertilizers & Chemicals Limited (GSFC) has reported Q2 FY25 revenue of Rs. 1,556 crore, down 12.3% YoY whereas profit was up by 6.3% to reach Rs. 303 crore.  

Turnover fell by 13% and 6% year on year in Q2 and H1, owing mostly to lower DAP and Urea trading volumes. However, YoY operating margins rose from 7% to 11% in Q2 and 7% to 9% in H1, allowing the company to report solid earnings.

The company's achievements occurred despite ongoing external challenges in both segments.

Declared subsidy rates for P&K fertilizers fell significantly year on year in Q2 and H1, with AS falling by 38%, APS/NPK falling by 35%, and DAP falling by 24%, resulting in reduced P&K fertilizer sales realization. Meanwhile, costs for essential inputs such as Natural Gas, Ammonia, and P2O5 have climbed year on year. Capro - Benzene spread reduced to $620 per MT in Q2 24-25 as against $673 per MT in Q2 23-24.

Abundant rainfall during the South-West Monsoon, combined with increased Minimum Support Prices for six major Rabi crops, will drive up demand for agricultural inputs in the coming quarter. However, the high price of phosphoric acid and the growing USD-INR exchange rate combined with the non-remunerative NBS rates declared for H2-24/25 are likely to pose challenges for the country's P&K fertilizer makers. To manage critical stock levels of DAP and NPK in the country, DoF has assigned manufacturing targets for domestic producers, including GSFC. To meet demand, the company intends to supplement fertilizer production with imports and expects sales of 5 lakh MT in Q3 24-25.

On the industrial products front, uncertain conditions in the Middle East, along with competitively priced imports, are expected to keep margins tight. However, the demand for our major industrial products from various application areas is predicted to continue to be stable to robust in the coming quarter, and the turnover of Industrial Products in Q3 24-25 is expected to be higher than Q2.