Summary
Gujarat Narmada Valley Fertilizers & Chemicals Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026 04:00 PM
Event Participants
Executives 6 D. V. Parikh (ED & CFO), Nitin Patel (ED), P. K. Purohit (ED), Rajesh Pillai (Company Secretary), Tejash Shah (Marketing Industrial Products), V. Biradar (Fertilizer Marketing)
Analysts 2 Aatur Shah, Nirav Jimudia
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Subsidy Outstanding | ₹302 crores | Managed within control; reflects stable subsidy flow from the government. |
| Total CAPEX Commitment | ₹2,600 crores | Total contracts awarded against the identified ₹2,800 crore growth plan. |
| CAPEX Spent to Date | ₹1,000 crores | Cumulative cash outflow as of December 2025 across major projects. |
| TDI Sales (9M FY26) | 47,610 metric tonnes | Impacted by 4-month Dahej plant shutdown; Q3 production stood at 16,000 MT. |
| Ammonia Production (Q3) | 1,75,000 tonnes | Comprised of 60% gas-based and 40% oil-based routes. |
| AN Melt Production (9M) | 1,16,000 tonnes | Core downstream chemical performance tracking expected levels. |
| WNA Production (Q3) | 1,10,000 tonnes | Combined output from both plants (77,000 MT and 33,000 MT). |
| CNA Production (Q3) | 38,000 - 39,000 tonnes | Total output across four units. |
Geographic & Segment Commentary
- Fertilizer Segment: Performance improved as segment losses narrowed due to the absence of unfavorable subsidy freight rates booked in the previous quarter. Urea volumes remained healthy, and Complex Fertilizers benefited from slight improvements in NBS (Nutrient Based Subsidy) rates.
- Chemical Segment: Driven by volume growth despite pricing pressure in most products except TDI during Q3. Management noted an improving trend in global prices for TDI and Acetic Acid starting January 2026, aligning with global market recoveries.
Company-Specific & Strategic Commentary
- Efficiency Transformation: Engagement with A.T. Kearney (since Oct 2025) targets ₹260-₹300 crores in annual operating savings. Management has already locked in ₹5-₹7 crores via renewable power PPAs, with further savings pending final supplier contract sign-offs.
- Energy and Power Reliability: Approved a new ₹480-₹500 crore coal-fired CFBC boiler at Bharuch with 83% efficiency (vs. current 71-75%) and a new DGVCL/GETCO power line to stabilize operations and valorize green power.
- Import Parity Pricing: TDI and other industrial products are priced strictly on an import parity basis to maintain transparency, with the anti-dumping duty (extended for 5 years) factored into final realizations.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| CCPP Project | Commissioning March/April 2026 | Expected to generate a net contribution of ₹82 crores (₹110 crores gross). |
| Weak Nitric Acid 3 | June 2027 | Capacity of 2,03,000 MT/annum; 70,000 MT earmarked for merchant sale. |
| Ammonia Loop | Post-Commissioning | Expanding by 50,000 MT/annum to fulfill nearly all downstream requirements. |
| Maintenance Shutdown | Q2 FY 2028 (April 2027) | No major shutdowns planned for Q4 FY26 or FY27; next major one in April 2027. |
Risks & Constraints
| Risk | Context |
|---|---|
| Raw Material Volatility | Methanol availability and price uncertainty continue to pose risks for Acetic Acid production due to geopolitical issues. |
| Execution Delay | Slight delays noted in the Weak Nitric Acid project, though management claims critical path activities remain unaffected. |
| Global Pricing Pressure | Aside from TDI, most chemical products faced pricing pressure in Q3 due to weak global demand, though trends started reversing in Jan 2026. |
Q&A Highlights
TDI Market Dynamics
- Question: How are global price increases and anti-dumping duties affecting domestic realizations? (Nirav Jimudia)
- Answer: GNFC uses import parity pricing. Global prices have improved since January 2026. The 5-year extension of the anti-dumping duty ($200-$300/tonne) provides a protective floor for realizations (D.V. Parikh, Tejash Shah).
- Question: What is the current market share and demand outlook? (Nirav Jimudia)
- Answer: GNFC holds ~60% domestic market share. Total Indian consumption is ~1.15 lakh tonnes, growing at 10% CAGR. Production will be easily absorbed domestically (Tejash Shah).
Operational Efficiency & CAPEX
- Question: What is the status of the cost-saving initiatives? (Nirav Jimudia)
- Answer: A.T. Kearney identifies ₹260-₹300 crores potential savings. Realization depends on contract sign-offs, though some renewable energy savings are already secured (D.V. Parikh).
- Question: Can you provide a breakdown of the ₹2,800 crore CAPEX? (Nirav Jimudia)
- Answer: Payments made are ₹1,000 crores, but commitments reach ₹2,600 crores. Major allocations include LSTK contracts, AN Melt with Toyo (₹357 crores), and the Ammonia loop (₹330 crores) (D.V. Parikh).
Key Takeaway
GNFC delivered a stable Q3 FY26, characterized by narrowing losses in the fertilizer segment and volume growth in chemicals, despite pricing headwinds earlier in the quarter. Strategically, the company is pivoting toward significant capacity expansion and cost optimization, evidenced by the ₹2,800 crore CAPEX plan—of which ₹2,600 crore is already committed—and the A.T. Kearney efficiency project aiming for up to ₹300 crore in annual savings. Key upcoming milestones include the commissioning of the CCPP project in early FY27 and the addition of the 50,000 MT ammonia makeup loop. While methanol volatility remains a watch point, the extension of anti-dumping duties on TDI and the recovery in global chemical prices from January 2026 provide a favorable tailwind. GNFC remains focused on reliability-led growth, with significant new capacities in Nitric Acid and AN Melt slated for FY27/28.
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