Deepak Fertilisers and Petrochemicals Corporation Limited Q3 FY26 Earnings Call Summary

Summary

Deepak Fertilisers and Petrochemicals Corporation Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026 4:00 PM IST

Event Participants

Executives 4 Sailesh Mehta (Chairman and Managing Director), Subhash Anand (President and CFO), Suparas Jain (EVP, Corporate Finance), Tarun Sinha (President, Technical Ammonium Nitrate)

Analysts 6 Aakash Maji (IIFL Capital), Chirag (Keynote Capital), Dev Mehta (Individual Investor), Kushal Shah (Individual Investor), Mukta Chandani (Arihant Capital), Niraj Mansingka (White Pine Investment), Pratyush Kamal (Incred Equities), Sheel Kumar Shah (Sameeshka Capital), Shubham Dhasmana (Asit Koticha Family Office)

Financials & KPIs

Geographic & Segment Commentary

• Mining Chemicals (TAN): Q3 volumes were flat due to extended monsoons slowing domestic coal mining, though the B2C segment grew 26% YoY. Management expects a Q4 recovery as water tables recede and mining picks up. Strategic focus remains on TCO-based (Total Cost of Ownership) customer engagement and expanding regional warehousing.
• Crop Nutrition (CNB): Revenue grew 26% YoY, though margins were squeezed by delayed Rabi sowing and raw material cost inflation not fully covered by subsidies. Specialty products and “Croptek” now contribute 30% of segment revenue, reflecting a shift toward value-added Fertilisers.
• Industrial Chemicals: IPA and Nitric Acid faced pricing pressure from global dumping and soft acetone prices. Nitric Acid volumes remained steady (+4% YTD), with a focus on high-margin applications like steel picking (PICKBRITE) currently in the ramp-up phase.

Company-Specific & Strategic Commentary

• Project Execution: The Gopalpur TAN project is 91% complete, and the Dahej Acid project is 79% complete. Both are scheduled for commissioning in Q1 FY27, which will significantly enhance margin resilience and domestic capacity.
• Forward Integration: Signed an agreement to acquire an Indian explosives manufacturer to provide bundled “outcome-based” solutions (KPI-guaranteed blasting) rather than just product sales. This move supports the downstream strategy for the Mining Solutions business (DMSL).
• Raw Material Security: A 15-year long-term LNG contract with Equinor (Norway) commences in Q1 FY27. This is expected to drive a “double-digit percentage” reduction in gas costs, lowering the Ammonia plant’s breakeven point.
• Corporate Restructuring: Completed the internal demerger of the Mining Chemicals business into Deepak Mining Solutions Limited (DMSL). While the entity is structured for independent growth, management has not yet finalized a timeline for a public listing.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Ammonia Economics & LNG Contract

• Question: How will the new LNG contract impact the Ammonia plant’s breakeven? (Niraj Mansingka)
• Answer: The current breakeven is ~$430 FOB Middle East due to high gas costs and reduced GST incentives. The Equinor contract starting Q1 FY27 will provide a double-digit percentage reduction in gas costs, making the plant significantly more profitable (Subhash Anand).

TAN Demand-Supply Dynamics

• Question: Will the 900 KTPA of new domestic TAN capacity (Deepak, Chambal, GNFC) lead to a supply glut? (Pratyush Kamal)
• Answer: No. India currently imports 4 lakh tons that can be substituted. Combined with a 6% CAGR in demand (2.5 lakh tons every 3 years) and the fact that GNFC’s capacity is not due until FY28, the market will remain balanced (Tarun Sinha).

Explosives Acquisition Strategy

• Question: What is the rationale behind the recent agreement to acquire an explosives manufacturer? (Kushal Shah)
• Answer: It is a downstream integration move to provide “outcome-based” solutions (guaranteeing mine KPIs) rather than just selling TAN. It also allows for bundling products for international markets and supporting the Australian subsidiary (Tarun Sinha).

IPA Pricing Softness

• Question: When will IPA realizations recover from their current lows? (Shubham Dhasmana)
• Answer: Prices have corrected by ~22-23% due to soft acetone costs. While a slow improvement is visible in late January, a full turnaround is not expected within the next 1-2 quarters as global cycles need to rebalance (Subhash Anand).

Key Takeaway

Deepak Fertilisers delivered a resilient Q3 FY26 with 10% revenue growth to ₹2,830 crores, despite a “black swan” triple-impact from extended monsoons that stalled mining, delayed Rabi sowing, and pressured industrial acid demand. While EBITDA fell 27% due to raw material inflation and soft IPA realizations, the company is nearing the end of its major capex cycle, with the Gopalpur TAN (91% complete) and Dahej Acid (79% complete) projects set for Q1 FY27 commissioning. Strategically, the firm is pivoting from commodity sales to high-value solutions, evidenced by specialty fertilizers reaching 33% of segment revenue and the planned acquisition of an explosives manufacturer to offer KPI-linked mining services. With a 15-year long-term LNG contract starting next quarter to lower ammonia costs and strong Rabi sentiments, management expects a significant strengthening of margin stability and earnings visibility in the medium term.