Gujarat State Fertilizers & Chemicals Limited: Q2 FY26 Performance Highlights

Gujarat State Fertilizers & Chemicals Limited (GSFC) has announced an exceptional performance for the second quarter and first half of fiscal year 2025-26, marking its ever-highest Q2 results. The company reported a robust total sales figure of Rs. 3,140 Crores for Q2 FY26, demonstrating a significant 45% quarter-on-quarter growth. This strong revenue performance translated into a substantial increase in profitability, with Profit After Tax (PAT) soaring by 129% sequentially to Rs. 320 Crores. From a year-on-year perspective, sales increased by 20%, and PAT grew by 6%, underscoring the company's resilience and strategic execution in a dynamic market.

The growth narrative was predominantly driven by the Fertilizer segment, which registered a commendable 21% increase in revenue year-on-year. This was primarily attributed to higher sales volumes, expanding from 5.47 Lakh MT to 6.08 Lakh MT, including substantial DAP trading activities. However, the segment's profitability faced headwinds from a steep rise in key raw material prices. Phosphoric Acid costs surged by 20%, Sulphuric Acid by 123%, and Sulphur by 150%. While higher realizations in P&K fertilizers offered some relief, a 15% decline in Urea realization significantly impacted margins. Despite these challenges, softer prices for Natural Gas and Ammonia provided partial respite.

Segmental Performance and Strategic Turnaround

The Industrial Products segment showcased a remarkable turnaround, moving from a loss of Rs. 17 Crores in the previous year to a profit of Rs. 54 Crores in Q2 FY26. Sales for this segment grew by 13% year-on-year, reaching Rs. 618 Crores. This improvement was largely propelled by higher sales of traded products, particularly Ammonia, and increased production and sale of HX Crystal. These positive factors helped mitigate the adverse effects of a declining Caprolactam-Benzene spread, which fell from USD 620 per MT to USD 512 per MT. The company's proactive cost optimization measures and astute product-mix management were instrumental in supporting overall profitability across both business segments.

Financial Summary (Rs. Crores)

Strategic Initiatives and Future Outlook

GSFC is actively pursuing several strategic initiatives and capital expenditure projects to sustain its growth trajectory. The Sulphuric Acid (SA-V) Project, with a capacity of 198 KTPA, is slated for commissioning in Q3 FY26. This project is expected to provide incremental capacity and cost efficiency benefits, catering to the requirements of Sulphuric Acid for manufacturing fertilizers like Ammonium Sulphate and Ammonium Phosphate Sulphate at the Vadodara Complex. Additionally, a C-Train Modification for APS Production at the Sikka Unit (1200 MTPD) is planned for Q4 FY26, and a Phosphoric Acid (PA) and Sulphuric Acid (SA) Project (198 KTPA PA & 594 KTPA SA) at Sikka Unit is set for Q1 FY27.

The company's urea revamping project, completed in June 2025, has successfully reduced steam consumption, with government subsidy consideration for the capital costs pending. Furthermore, GSFC has initiated plans to convert or add facilities at its Sikka DAP plant to produce NPK grade fertilizers, aiming to diversify its product portfolio. The management emphasized maintaining a strong balance sheet with no long-term debt and healthy liquidity, supported by timely government subsidy disbursements.

Volume Performance - Quarterly (Lakhs MT)

Sustaining Growth Amidst Volatility

Looking ahead, GSFC anticipates healthy demand for agri-inputs to continue in the upcoming quarter, buoyed by an above-normal southwest monsoon and higher Minimum Support Prices for key Rabi crops. The government's announcement of increased NBS subsidy rates for Phosphorus and Sulphur nutrients for H2 FY26 further supports this positive outlook. The company is well-positioned to achieve its sales targets for Q3, leveraging its domestic manufacturing capacities and comfortable opening fertilizer inventories. While the Caprolactam-Benzene spread is expected to remain under pressure, the Industrial Products segment is projected to maintain stable demand and turnover, supported by product-mix management and export opportunities for Melamine.

GSFC's Q2 FY26 performance reflects a company adept at navigating raw material volatility and market challenges through strategic initiatives and operational efficiencies. The focus on capacity expansion, cost optimization, and product diversification positions GSFC for sustained growth and profitability in the quarters to come, reinforcing investor confidence in its long-term vision.