GSFC Q2 Results | Net profit, revenue drop but margins rise in tough fertiliser scenario

Gujarat State Fertilisers and Chemicals Ltd (GSFC) on Tuesday (November 12) reported a 3.5% year-on-year (YoY) dip in net profit at ₹298.2 crore for the second quarter that ended September 30, 2024. In the corresponding quarter of the previous fiscal, GSFC posted a net profit of ₹309 crore, the company said in a regulatory filing.

Revenue from operations fell 15.5% to ₹2,635.2 crore against ₹3,118.7 crore in the year-ago period.

At the operating level, EBITDA surged 19.6% to ₹283.7 crore in the second quarter of this fiscal over ₹237.3 crore year-on-year.

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The EBITDA margin stood at 10.8% in the reporting quarter versus 7.6% in the corresponding period of the previous fiscal. EBITDA is earnings before interest, tax, depreciation, and amortisation.

GSFC reported a 13% year-on-year decline in turnover for Q2 FY25 and a 6% drop for the first half (H1) of FY25, primarily due to lower trading volumes in diammonium phosphate (DAP) and urea. Despite this, the company’s YoY operating margins improved from 7% to 11% in Q2 and from 7% to 9% in H1, resulting in strong earnings.

GSFC’s performance came amid challenging external conditions, including a substantial decline in declared subsidy rates for phosphorus and potassium (P&K) fertilisers, with ammonium sulphate (AS) dropping 38%, ammonium phosphate sulphate (APS)/NPK down 35%, and DAP down 24%, impacting P&K fertiliser sales realisation.

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Additionally, costs for critical inputs like natural gas, ammonia, and P2O5 increased YoY, while the capro-benzene spread narrowed to $620 per tonne in Q2 FY25 from $673 per tonne in the prior year. In response, GSFC focused on boosting capacity utilisation, increasing sales of manufactured products, and optimising its product-mix across both segments.

These initiatives led to a 16% increase in fertiliser output (up by 1.21 lakh tonnes) and a 1.30 lakh-tonne rise in manufactured fertiliser sales volume for the first half.

The results came after the close of the market hours. Shares of Gujarat State Fertilisers and Chemicals Ltd ended at ₹195.80, down by ₹3.10, or 1.56%, on the BSE.

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