Deepak Fertilisers FY26: Revenue Up 12%, But Margins Wait for the Capex Payoff

Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL) ended FY26 with consolidated operating revenue of ₹11,506 crore, up 12% year on year, but profitability remained under pressure. Operating EBITDA declined to ₹1,684 crore from ₹1,925 crore in FY25, and PAT fell to ₹739 crore from ₹945 crore.

The company described FY26 as a year where demand was resilient, but cost inflation and supply disruptions shaped the earnings trajectory. Management highlighted three key drags: delayed pass-through of war-led raw material inflation, inadequate fertiliser subsidy support, and a planned ammonia plant turnaround in Q4 that carried a one-off impact of around ₹70 to ₹75 crore.

FY26 in numbers: Growth held, profitability softened

The topline held up largely due to volume-led growth in Mining Chemicals (TAN) and steady performance in core fertilisers, even as Industrial Chemicals faced weak IPA pricing and feedstock constraints.

Management also noted that the FY25 PAT included a one-time tax credit of ₹40 crore, and after adjusting for this, the FY26 PAT decline was described as about 18%.

Segment performance: TAN recovered, CNB faced subsidy stress

DFPCL’s segment commentary underscored a clear divergence across businesses.

Mining Chemicals (TAN) delivered a strong Q4 recovery after a softer Q3. Management said Q4 volumes were up 12% YoY and 27% QoQ, while FY26 volumes grew about 11%. A structural highlight was the continued scaling of the B2C mining segment, with B2C revenue share rising to 16% in FY26 from 13% last year.

Industrial Chemicals saw healthy nitric acid volumes, but the IPA business remained challenged. Management cited pricing weakness for much of the year and later constraints in refinery-grade propylene (RGP) availability. The company expects nitric acid demand to strengthen, supported by limited import supply.

Crop Nutrition Business (CNB) was the weakest link in Q4. Management attributed the impact to sharp increases in input costs and inadequate subsidy support, which limited the company’s ability to pass costs through. Even so, the company highlighted continued premiumisation. Specialty products and Croptek together contributed 33% of fertiliser revenue versus 30% earlier.

Capex, commissioning and the FY27 setup

DFPCL is approaching the end of a large capex cycle. The investor presentation details an aggregate capex of about ₹4,650 crore underway, with two large projects targeted for commissioning in Q2 FY27.

1. TAN project at Gopalpur: 376 KTPA capacity, ₹2,675 crore capex, 95% progress.

2. Nitric Acid project at Dahej: WNA 300 KTPA and CNA 150 KTPA, ₹1,983 crore capex, 86% progress. The company stated that 65% of CNA capacity is tied up through a 20-year long-term contract.

In the concall, management acknowledged that project timelines had seen some realignment, citing shortage of skilled contract manpower and related disruptions. However, management stated it does not expect further delays and reiterated commissioning expectations for Q2 FY27.

For FY27, the CFO indicated remaining capex spending of roughly ₹800 crore to ₹1,000 crore, including maintenance, given cumulative spend including GST and advances was stated at around ₹3,800 crore.

LNG contract milestone: First cargo received

A major operational milestone in Q1 FY27 is the commencement of LNG supply under the company’s 15-year contract with Equinor. The Chairman stated the maiden cargo arrived in May 2026. The CFO added that additional parcels are lined up through the year and described the company as comfortably placed on gas supply.

Management positioned the contract as a support for supply security and cost visibility across the ammonia value chain, which feeds into downstream fertilisers, acids, and ammonium nitrate.

Balance sheet: leverage increased ahead of commissioning

The capex cycle has increased leverage. The company’s presentation reported net debt of ₹4,824 crore at Mar-26 and Net Debt to EBITDA of 2.86x, up from 1.72x at Mar-25.

Management did not provide a debt reduction guidance, stating that the company still needs to complete both projects and will balance capex needs with debt levels.

Corporate actions and disclosures

The board recommended a dividend of ₹10 per share for FY26, subject to shareholder approval.

The notes to accounts also disclosed an ongoing tax matter at subsidiary Mahadhan AgriTech Limited (MAL). The company stated that a related penalty appeal amounting to ₹9,604 lakh for AY 2015-16 is pending adjudication, while management remains confident of a favourable outcome.

What to watch next

DFPCL’s FY26 story is best understood as a transition year. Revenue growth remained resilient, but margins were hit by cost shocks, subsidy lag, and a planned ammonia turnaround.

FY27 is positioned as the year where the company’s planned levers start to show through: new capacity commissioning, improved gas supply stability via the Equinor contract, continued specialty and B2C mix enrichment, and the ramp-up of DMSL’s move toward integrated mining solutions.

The near-term test will be execution. If the projects commission on schedule and spreads remain supportive, the operating leverage embedded in the expanded asset base should become more visible in reported profitability.