Gujarat Narmada Valley Fertilizers and Chemicals (GNFC) Q2 25/26 earnings summary

Executive summary

• Board approved a major downstream ammonium nitrate melt project, adding 163,000 tons capacity, with total CapEx pipeline above INR 2,800 crore for ongoing projects.

• Additional investments under consideration include Bisphenol A and polyol projects, with a potential combined CapEx of INR 7,000-8,000 crore, pending feasibility studies.

• Q2 FY25-26 saw significant year-over-year improvement in performance, driven by higher sales volumes and reduced input costs, despite a non-comparable Q1 due to annual plant shutdowns.

• Government policy changes, including increased fertilizer subsidies and extension of anti-dumping duties on TDI and other chemicals, supported competitiveness and margins.

• Strategic management consultant engaged for cost optimization and business planning, with annualized savings expected from the second half of next year.

Financial highlights

• Q2 FY25-26 operating revenue was ₹1,968 crore, up from ₹1,917 crore in Q2 FY24-25; H1 FY25-26 revenue was ₹3,569 crore.

• Q2 FY25-26 PAT was ₹177 crore, up from ₹102 crore in Q2 FY24-25; consolidated Q2 net profit after tax was ₹179 crore.

• Cash and bank balances reduced from INR 2,300 crore to INR 800-836 crore due to dividend payout, CapEx, and working capital needs.

• Net subsidy outstanding as of September 30 is INR 288 crore.

• Dividend of INR 18 per share distributed for FY24-25.

Outlook and guidance

• Revised nutrient-based subsidy rates and extension of anti-dumping duty on TDI expected to support future margins.

• Operational cost improvements anticipated with the commissioning of the new power plant in FY25-26.

• No major plant shutdowns planned for H2; full operations expected barring unforeseen events.

• Ongoing evaluation of new projects, with a total investment chest size of INR 15,000 crore prioritized by feasibility and technology access.

• Management expects further margin improvement at Dahej and stabilized throughput at Bharuch.