Deepak Fertilizers Puts Gopalpur, Dahej Plants On Fast-Track For Revenue Boost

Commodity chemicals manufacturer Deepak Fertilizers & Petrochemicals Corp. is expecting a boost to its revenue and net profit figures from the two upcoming plants. The optimism over future follows company recently reported a stellar September quarter with topline print rising more than three times over the year-ago period.

"Two of our large capex plans are going to move into the commissioning stage in the next two years. The TAN (Technical Ammonium Nitrate) project that we have taken up in Gopalpur and our Dahej nitric acid project are both in a fast-pace execution mode,” Sailesh Mehta, Chairman & MD at Deepak Fertilizers told NDTV Profit.

This will result in the company increasing both its revenues and net profit in the near term, the top executive explained.

“In the next 1.5–2 years, both will get commissioned. We are seeing both our top line and bottom line accretion emerging from that growth itself,” he said.

The chemicals and fertiliser manufacturer had on Tuesday reported a 237% jump in net profit for the quarter ended September, at Rs 214 crore versus Rs 63 crore in the same quarter last year.

Operating revenue rose 13% year-on-year to Rs 2,747 crore in the second quarter from Rs 2,424 crore in the corresponding period of the last fiscal.

Operating Ebitda surged 73% YoY to Rs 494 crore in Q2 from Rs 286 crore in the year-ago period. 

While Mehta refrained from providing a revenue guidance in the backdrop if the capex spends, "you are seeing the capacity is coming in, so that can give you an assurance that there is an upswing around the corner".

Deepak Fertilizers And Petrochemicals Corp. also reported a 620 basis point uptick in its Ebitda margins to 18% in Q2 from 11.8% in the second quarter of last fiscal.

On the margin front, Mehta said, two things that worked for the company were, “In the short run, good rain is positive. The second thing is that we have done a backward integration into our ammonia product.”

The company chairman noted that till last year, Deepak Fertilizers was importing ammonia, which is a critical raw material for all its three businesses.

“Last year, we set up and commissioned a world-class ammonia plant just opposite our complex. That is somewhere bringing in the stability, improved margins and a certain trend of risk mitigation,” he said.

Mehta pointed out, “Today, if the ammonia plant was not there, we would have (had) to face the impact of tensions in the Middle East.”

Shares of Deepak Fertilizers and Petrochemicals Corp. on Thursday closed 2.57% higher at Rs 1,246 apiece, compared to the benchmark Nifty 50 that ended trade 0.51% lower at  24,205.35.