Gujarat State Fertilizers & Chemicals Ltd (GSFC) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, welcome to the Q2 FY24 GSFC Conference Call. Please stay on the line, we'll start in a few minutes.
Moderator (Anurag Services LLP): Ladies and gentlemen, good day, and welcome to Gujarat State Fertilizers & Chemicals Limited Q2 FY '27 earnings conference call. This call is being hosted by Anurag Services LLP on behalf of GSFC Limited. Representing the management, we have Mr. S. K. Bajpai, Senior Vice President of Finance & Legal and CFO alongside with other senior executives. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchtone phone. Please know that this conference is being recorded. I now hand the conference over to Mr. S. K. Bajpai, Senior Vice President of Finance and Legal and CFO of GSFC Limited. Thank you, and over to you, sir.
S. K. Bajpai (Gujarat State Fertilizers & Chemicals Ltd): Okay. Thank you. So, good afternoon, everyone. Thank you for joining us for Q2 2027 earnings call for Gujarat State Fertilizers & Chemicals Limited. It's always great to connect with all of you and share the key updates that we have from the quarter.
S. K. Bajpai (Gujarat State Fertilizers & Chemicals Ltd): had a chance to review the financial results, media release and investor presentation available on the stock exchanges and also on our company's website. If we see consolidated financial performance, sales is up by 49% in Q2 YoY basis. However, PBT and PAT is reduced by 42% and 38% respectively. If we see consolidated H1 number YoY basis, then we have 55% growth in the sales revenue, 8,324 crores. However, PBT and PAT again is down by 26% and 22% respectively. If we see quarter-over-quarter, there is an increase of 32% in sales value to 4,741 crores. However, PBT and PAT, it is 249 crores and 200 crores, that is up by 22% and 26% respectively. So, the company has delivered its ever-highest Q2 and H1 top lines, achieving total sales of 4,711 on standalone basis in quarter 2 '26, '27, a YoY growth of 50%, and ₹8,293 crores in H1 '27, a YoY growth of 56%. In quarter 2 '27, the Fertilizer segment recorded a 55% YoY growth in sales value, increasing by ₹1,387 crores despite a 6% decline in sales volume, from 6.08 lakh metric ton to 5.69, 69 lakh metric ton. The growth was primarily driven by the higher DAP realization with DAP revenue increasing by ₹1,659 crores, supported by the government's DAP special package to compensate for international price variations. However, sharp increases in key raw material costs, particularly sulfur by 327%, natural gas by 62%, significantly impacted margins, compressing EBIT of the Fertilizer segment to ₹17 crores only, compared with ₹224 crores in quarter 2 '26. Urea subsidy rates remained subject to revision following finalization of the actual pooled gas rate by FICC and GAIL, which has been pending since April '26. The Industrial Products segment continued its positive performance in quarter 2 '27 also with sales increased by ₹185 crores, registering a 30% growth over Q2 '26. EBIT improved from 54 crores to 66 crores. The improvement was supported by better realization across main major product in line with the market trends. Sales of caprolactam and nylon 6 increased by ₹58 crores and ₹60 crores respectively, mainly due to higher realizations, while ANOM sales increased by ₹36 crores, driven by higher volumes. TGU sales also increased by ₹26 crores, partly offset by a ₹5 crore decline in melamine sales. The Capro-Benzene spread improved significantly from US$512 per metric ton to US$849 per metric ton. Overall, against a backdrop of highlighted high, heightened geopolitical uncertainty and evolving global supply chain dynamics, the company sustained uninterrupted operations and ensured supply continuity during the quarter. While sharp movement in key raw material prices put pressure on profitability, agility in product mix, responsive production planning, and timely pricing actions enabled the company to mitigate the impact and defend core margins across business segments. We continue to maintain a strong balance sheet with no long-term debt, healthy net worth, and adequate liquidity. As on 30th September '26, the company has received subsidy dues for P&K fertilizers up to September and in case of urea up to October, October third week respectively. The company continues to advance its capex plans aligned with its strategic growth roadmap. Suite and modification for 1,200 metric ton per day APS production in place of DAP as per market requirement at Sikka unit was commissioned on 23rd October '26. The com- country will enter the rabi season with comfortable fertilizer inventory levels, the highest in the past three years, particularly for urea and NPK grades, intensifying competitive pressure across the industry. The subdued Southwest monsoon and lower reservoir level, especially in the southern India, are likely to constrain fertilizer demand. The prevailing price distortion between DAP and NPK fertilizers continues to influence farmers' purchase preferences, adversely affecting NPK offtake. The forthcoming NB-
S. K. Bajpai (Gujarat State Fertilizers & Chemicals Ltd): subsidies will play a vital role, in particularly, mitigating elevated raw material costs and addressing price distortions. Concurrently, any easing of geopolitical tensions in the Middle East and Europe could soften international raw material prices and provide relief to industry margins. The Caprolactam-Benzene spread is expected to moderate in Q3 '27 as regional supply normalizes, potentially impacting margins across the Caprolactam-Nylon value chain. Demand for Melamine and Technical Grade Urea is expected to remain steady, while HX crystal exports exports may improve. Amid subdued domestic demand, other industrial products are projected to maintain steady demand, delivering reliable baseline stability to the segment. I now turn over the call for questions and answers.
Moderator (Anurag Services LLP): Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Saket Kapoor from Kapoor & Co. Please go ahead.
Saket Kapoor (Kapoor & Co): Yeah. Namaskar. Hope I'm audible.
S. K. Bajpai (Gujarat State Fertilizers & Chemicals Ltd): Yeah, yeah. Please go ahead.
Saket Kapoor (Kapoor & Co): Sir, firstly in terms of the capex program, my voice is echoing, sir.
S. K. Bajpai (Gujarat State Fertilizers & Chemicals Ltd): No, I am good. I'm good.
Saket Kapoor (Kapoor & Co): Okay.
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