Paradeep Phosphates Limited Q2 profit fell 64% on margin decline

Paradeep Phosphates Limited reported Q2 FY27 profit after tax of Rs 122.4 crore, down 64.1% year on year, as earnings before interest, tax, depreciation and amortisation (EBITDA) margin fell to 5.8% from 10.1% despite 7.2% growth in revenue from operations. Purchases of trading goods increased 69.5% to Rs 3,356.2 crore.

Why did PPL's Q2 FY27 profit fall despite revenue growth?

PPL's profit fell because its operating earnings declined while revenue rose. Revenue from operations increased to Rs 7,364.1 crore in Q2 FY27 from Rs 6,872.2 crore in Q2 FY26, but EBITDA declined 38.3% to Rs 431.2 crore from Rs 698.4 crore. Profit before tax (PBT) fell 65.0% to Rs 164.2 crore, while reported profit after tax declined from Rs 341.2 crore.

The largest disclosed cost movement was purchases of trading goods, which rose 69.5% year on year to Rs 3,356.2 crore, compared with revenue growth of 7.2%. Cost of materials consumed decreased 2.1% to Rs 3,169.4 crore, while employee-benefit expense rose 2.1% to Rs 83.7 crore and other expenses rose 2.1% to Rs 890.3 crore. Other income declined 57.4% to Rs 17.8 crore.

How much did PPL's Q2 FY27 margins decline?

PPL's EBITDA margin declined by 4.3 percentage points to 5.8% in Q2 FY27 from 10.1% in Q2 FY26, and from 12.1% in Q1 FY27. The presentation calculates margins on total income and includes other income in EBITDA. Total income rose 6.8% year on year to Rs 7,381.8 crore, which did not offset the higher trading-goods purchases.

The decline continued below EBITDA. Earnings before interest and tax margin fell to 4.4% from 8.8%, PBT margin declined to 2.2% from 6.8%, and reported profit-after-tax margin moved to 1.7% from 4.9%. Sequentially, Q1 FY27 reported profit after tax was Rs 393.2 crore, with a 6.4% margin, compared with Rs 122.4 crore and 1.7% in Q2 FY27.

PPL's H1 FY27 figures show revenue growth alongside lower profitability. Revenue from operations increased 18.6% to Rs 13,488.3 crore, while EBITDA declined 10.7% to Rs 1,173 crore and EBITDA margin fell to 8.7% from 11.5% in H1 FY26. Reported profit after tax decreased 21.8% to Rs 515.6 crore and its margin declined to 3.8% from 5.8%.

What changed in PPL's sales and production mix?

PPL sold 1,014,488 metric tonnes (MT) of total fertilisers in Q2 FY27, down 25.1% year on year, while traded products rose 12.7% to 380,777 MT. The traded-products category includes triple super phosphate (TSP), diammonium phosphate (DAP), muriate of potash (MOP), ammonium sulphate and N-15. The presentation does not separately quantify the profitability of traded-product sales.

DAP sales, including traded DAP, rose 21.2% to 322,283 MT and urea sales increased 3.0% to 247,066 MT. These increases were outweighed by a 47.6% decline in total NPK sales, including ammonium sulphate, TSP, single super phosphate and MOP, to 445,138 MT. MOP sales rose 87.6% to 75,872 MT, while TSP sales fell 37.5% to 99,607 MT.

Production also shifted between product categories. Total fertiliser production fell 42.2% to 581,343 MT, as total NPK production declined 71.6% to 185,279 MT. DAP production increased 29.2% to 151,530 MT and urea production rose 3.4% to 244,534 MT; sulphuric-acid production increased 25.2% to 367,121 MT, while phosphoric-acid production declined 18.9% to 97,600 MT.

What does PPL disclose about working capital and debt?

PPL reported that net working-capital days increased to 116 in H1 FY27 from 86 in FY26 and 73 in FY25, attributing the elongated cycle to global uncertainties and supply-chain disruptions. Receivable days rose to 83 from 66 in FY26, and inventory days rose to 95 from 81. Payable days increased to 62 from 61.

Total debt increased to Rs 9,847.2 crore in H1 FY27 from Rs 6,872.3 crore in FY26, led by short-term debt of Rs 8,849.2 crore against Rs 6,056.5 crore. Cash and cash equivalents, which PPL says additionally encompass investments and bank balances, were Rs 481.2 crore. Net debt rose to Rs 9,366.1 crore and net debt to equity increased to 1.31 times from 0.95 times.

Management identified sulphur pricing and availability as areas of global uncertainty and said the impact of the Rabi notification had yet to be factored in. Managing Director and Chief Executive Officer N. Suresh Krishnan said H1 FY27 EBITDA per tonne was Rs 5,866, compared with Rs 5,716 in H1 FY26, alongside H1 sales volume of about 2 million tonnes.

What is PPL planning after the Q2 FY27 margin decline?

PPL said phase one of its Paradeep phosphoric-acid expansion is on track to raise capacity from 500,000 MT per annum to 700,000 MT per annum. The public hearing for environmental approval of the Paradeep capital-expenditure programme has been completed, and management said it expected environmental approvals shortly. The presentation gives no project cost, commissioning date or expected financial contribution.

PPL also said its Goa energy-efficiency project was completed and optimised urea energy consumption by 0.3 gigacalories per MT. During Q2 FY27, PPL launched JAI KISAAN NAVRATNA CROPFIT for sugarcane cultivation in Karnataka and incorporated Fertilizer Innovation Foundation India to support research and sustainable agricultural practices. Management said it would focus on integrated supply-chain operations and value-added product-mix optimisation.

Conclusion

PPL's Q2 FY27 result shows that a 7.2% increase in revenue from operations did not prevent lower earnings as purchases of trading goods rose 69.5% and total fertiliser sales declined 25.1%. EBITDA fell 38.3%, EBITDA margin declined to 5.8%, and reported profit after tax fell 64.1%. H1 FY27 showed the same broad pattern, with revenue rising 18.6% while EBITDA declined 10.7%.

The next disclosed milestones are environmental approvals for the Paradeep capital-expenditure programme and progress on phase one of the phosphoric-acid expansion to 700,000 MT per annum. PPL also identifies sulphur pricing and availability, the yet-to-be-factored Rabi-notification impact, and 116 net working-capital days in H1 FY27 as matters to watch alongside trading-goods purchases and margins.