Deepak Fertilisers and Petrochemicals Corporation Ltd (DFPCL) reported a sharp year-on-year decline in Q3 profitability, with net profit falling 43.6% to ₹141.5 crore compared with ₹251 crore in the corresponding period last year. According to The Economic Times, the company's EBITDA also declined 27.4% year-on-year to ₹353 crore, down from ₹486 crore in the year-ago period. The Pune-based company's consolidated net profit fell to ₹1.41 billion rupees for the quarter ended December 31, from ₹2.51 billion rupees a year earlier. The significant decline was attributed to softer agrochemicals demand and rising input costs that squeezed margins. Total expenses climbed 17%, driven by an increase in the cost of materials consumed, particularly sulphur and ammonia prices that drove up input costs.
Despite the earnings pressure, revenue for the quarter rose 9.7% year-on-year to ₹2,830 crore from ₹2,579 crore in the same period a year ago, indicating growth in topline despite pressure on margins. However, EBITDA margin declined significantly to 12.5% from 18.9% in the corresponding quarter last year, reflecting the impact of operational challenges on profitability. The mainstay fertilisers segment grew 26%, while the chemicals segment slipped 7.5% during the quarter. The company noted that fertilisers remain better placed than agrochemicals, supported by steadier demand and stronger long-term growth prospects.
The company announced that its board of directors approved the permanent closure and dismantling of the company's 300 tonnes-per-day methanol plant located at the K1 unit. As reported by The Economic Times, the plant has not been operational since August 2021 and was set up in 1991. The company stated that after delivering returns and paybacks over its operating life, the plant has outlived its utility in terms of current economic size and efficiency requirements. The dismantling of the methanol plant is expected to free up land to accommodate alternative project ideas that could be undertaken to derive brownfield growth advantages.
The closure is also expected to contribute positively to environmental sustainability, with the company noting that it will lead to the elimination of potential emission sources and reduction in energy and water consumption associated with outdated production routes. The dismantling of the methanol plant is expected to free up land to accommodate alternative project ideas that could be undertaken to derive brownfield growth advantages.
Shares of Deepak Fertilisers & Petrochemicals Corporation Ltd ended at ₹1,086.00, down by ₹86.00, or 7.34%, on the BSE following the earnings announcement. The significant decline in profitability and margin compression weighed on investor sentiment, with the plant closure announcement adding to concerns about operational efficiency and future growth prospects. Companies have taken to small price hikes to partially offset the impact of rising input costs, but higher raw material costs are expected to hurt profitability, especially for complex fertiliser producers.
