Shree Pushkar Chemicals & Fertilisers Limited (SHREEPUSHK) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Shree Pushkar Chemicals & Fertilisers Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pankaj Manjani, Company Secretary and Compliance Officer. Thank you, and over to you, sir.

Good evening, everyone, and I welcome all the participants to Shree Pushkar Chemicals & Fertilisers Limited Q3 FY '25 Finance Call. Joining us today from the management side, we have Mr. Punit Makharia, Chairman and Managing Director; Mr. Deepak Beriwala, Chief Financial Officer. Now I will hand over the call to Mr. Punit Makharia for his opening remarks. Over to you, sir.

Thank you, Pankaj. A very good evening to everyone, and welcome to Q3 FY 2025 Earnings Call of Shree Pushkar Chemicals & Fertilisers Limited. Friends, I hope you had an opportunity to review our financial results as well as investor presentations, which are available on the stock exchange as well as on the company's website. As a reflection of our performance for the third quarter, we are pleased to report consistent growth across our business segments, supported by strong demand trends and a favorable industry environment. Our Fertiliser division saw a sales volume increase to 70,046 metric tonnes, marking a substantial 49.9% growth year-on-year while our Chemical division recorded sales of 15,147 metric tonnes, reflecting 2.3% decline compared to Q3 FY '24. Overall, total sales volume of the quarter reached 85,193 metric tonnes, a year-on-year increase of 36.1%. Hence, in line with our expansion strategy we have invested INR 16.41 crores in CapEx during Q3 FY '25, bringing the total capital expenditure for the year up to INR 84.9 crores as on December 31, 2024, and the entire funding is through internal accruals. These investments focus on increasing production capacity, improving cost efficiency and reinforcing our competitive edge in the market. A key milestone during the quarter was approval of scheme on amalgamation between our wholly owned subsidiaries, Madhya Bharat Phosphate Private Limited and Kisan Phosphates Private Limited. This merger is a strategic move aimed at streamlining operations, optimizing resources, allocation and enhancing synergies across the group. By consolidating this business, we expect to achieve cost efficiency and eliminate risk and strengthen our business position in fertiliser sector. This initiative aligns with our broader goal of driving long value creation for our stakeholders. A key highlight of our financial strategy remains non-lien deposit facility, which stood at INR 146.19 crores as on 31st December 2024. This facility provides us the strong liquidity and financial flexibility, enabling us to support both ongoing operations as well as future strategic initiatives with the confidence. Friends, looking ahead, we remain optimistic about our business environment, supported by infrastructure development, manufacturing growth and favorable government initiatives. We will continue to leverage these opportunities through strategic investments, operational efficiency and a sharp focus on sustainable growth. With that, I would like to hand over the call to our CFO, Mr. Deepak Beriwala, to walk you through the financial performance of the quarter. Over to you, Deepak.

Thank you, sir. Good evening, everyone, and thank you for joining us today. I will now take you through the highlights of our financial performance for the third quarter of FY 2025. In Q3 FY '25, the Fertiliser division achieved a sales volume of 70,046 metric tonnes, marking a substantial growth of 15% and a strong 49% increase compared to Q3 FY '24. Meanwhile, the Chemical division delivered a sales volume of 15,147 metric tonnes, reflecting a decline of 2.3% quarter-on-quarter and year-on-year, a decrease of 4.6%. Together, these results brought a total sales volume for the quarter to 85,193 metric tonnes, a 36% year-on-year growth. For 9 months FY '25, the Fertiliser division maintained its growth momentum, achieving a 31.7% increase in volume reaching 200,664 metric tonnes. Meanwhile, the Chemical division exhibited stability, recording a 1.5% rising in volume totaling 46,600 metric tonnes. On the financial front, consolidated revenue for Q3 FY '25 stood at INR 217 crores, registering a 24.3% growth year-on-year. EBITDA for the quarter was INR 22.4 crores, up by 60% year-on-year, translating to an EBITDA margin of 10.3%. Net profit for Q3 FY '25 came in INR 15.9 crores, representing a year-on-year growth of 108% with a net profit margin of 7.30%. For the 9 months ended December 31, 2024, our revenue reached INR 586.9 crores, reflecting a growth of 9.6% compared to the same period last year. EBITDA for the 9 months amounted to INR 59.2 crores, a 41% increase year-on-year with an EBITDA margin of 10.1%. Net profit for the 9 months was INR 42.1 crores, a significant 75% improvement year-on-year, yielding a net profit margin of 7.2%. With that, we open the floor for questions. Thank you so much.

[Operator Instructions] The first question comes from the line from Preet [indiscernible].

I wanted to congratulate the management on delivering very strong numbers. Punitji, [Foreign Language].

[Foreign Language] for keeping faith and trust in the company. And we've been always trying our level best to be very transparent and give the actual visibility what we feel so. And by grace of the God and thanks to our team which have been successful in doing -- achieving the targets what we plan. Still, we have to go a long road ahead. Let's see. God is great, we'll do that.

[Foreign Language] Should we assume that sense that you've made strong performance in Q3?

[Foreign Language] that was always around INR 800 crores total revenue. And by Q3, we have done almost INR 586 crores. So, [Foreign Language] I'm quite hopeful that we will go above INR 800 crores. So I think we'll be able to achieve this INR 800 crores plus business in this financial year. This is what we had targeted and we visualized before.

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Sir, could we expect 14% EBITDA for FY '26 [Foreign Language]

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[Foreign Language] because we've been doing smooth business with Bangladesh. None of our the shipments have been held out, none of our payments have been held out. None of our customers has given any impression [Foreign Language] I was never under depression about Bangladesh.

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[Foreign Language] these might be countries to countries where in the sector where we are, I don't see any issues to those sectors. And plus the America was never our market and still is not our market. Neither we buy anything from America, neither we sell anything to America.

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[Foreign Language] Our chemical utilisation, I believe, would be around 50% to 55% and fertilisers 60% to 65%.

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[Foreign Language] same way, I think this 15%, 20%, whatever is the balance is there, can be ramped up immediately, that's not a big issue.

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[Foreign Language] There was a fire accident in our factory at unit #1, because of that accident, our unit was closed for almost 45 days, which has been reported to the exchange also.

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The next question comes from the line of Harshil Solanki from Equitree Capital.

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[Foreign Language] Q2 FY '25, 732 tonnes of the dyes we've sold. Q3 '25, 965 tonnes we have sold. [Foreign Language] as it is mainly because of our subsidiary, Kisan Phosphates Private Limited. In that particular period, [Foreign Language]

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[Foreign Language] Sir, you were specific on dyeing vertical. But if you look at it overall, so you will see [Foreign Language] that is mainly and only because of the acid business because Kisan's acid plant was under shutdown.

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[Foreign Language] are you talking about intermediates, dyes, fertilisers, animal health, acid, others? [Foreign Language]

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[Foreign Language] Same was in dyes also. If you put all together, it is 2,802 tonnes of dyes of intermediates in Q2. [Foreign Language] If still anything is there, you can get in touch with Churchgate Partners, they will come back to us and we will try to address it locally.

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[Foreign Language] sir, any business, any industry you do, this has to be stable and sustainable footings [Foreign Language] that is not the concern [Foreign Language] which takes a greater market share of DAP in case of shortage of DAP. But anyway, we are not relying upon the DAP shortage or the excess DAP supplier or regular DAP supplier. Mainly, we are building our own brand and customer base, whereas you know we are not dependent on the DAP thing. But yes, [Foreign Language] still we've around 1.5 months to go. [Foreign Language]. Now in this financial year, I think we should be touching close to [Foreign Language] our marketing is doing good, and the people are having a great penetration into the market also [Foreign Language].

[Operator Instructions] The next question comes from the line of Souresh Pal from KRSP Capital Limited.

Sir, as I can see, if I compare our volumes and revenue from quarter 2 to quarter 3, I can see that both in Fertiliser as well as Chemical division, the revenue growth is more than volume growth or volume degrowth, whatever. So there is clear -- it is clear that there has been a price increase that we have enjoyed in quarter 3. But in your presentation, you have reported that there is a contraction in gross margin. So I don't understand. If pricing has improved because revenue growth is more than volume growth, then how come there is a reduction in gross margin, sir? That's my question.

Let our CFO see in the data about this, your question, sir. Deepak you understood his question? He says that in gross margin, there is a compression. That is right?

Yes, sir, yes, sir. In this presentation, in the slide -- PPT slide also it is there.

Page number?

Yes, just a second. Let me open it. Just a second. It is towards the end. It is towards the end. Let me tell you that slide number, let me open it. It is a Page #7, sir, Yes. Page #7. Sir, am I right about the pricing growth? That's what I'm right, right? That there has been a pricing increase in quarter 3 from quarter 2.

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Sorry sir, it is a page number, yes it is Page #7, right. Quarter 3 and 9 months FY '25 consolidated profit and loss statement.

In gross profit, there is contraction.

Yes, yes.

[Foreign Language] because we can't see. Our CFO can't see. [Foreign Language] Because here what we see is that EBITDA margins have improved from 8% to 10.3%. Here you can see the EBITDA amount has gone from INR 14 crores to...

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That is mainly because of inventory change. [Foreign Language]

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It is mainly because of change in inventory, sir.

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[Operator Instructions] The next question comes from the line of Anshuman, an Individual Investor.

Punitji, congratulations for a great set of numbers. [Foreign Language]

[Foreign Language] You have always been an inspiring investor to us. [Foreign Language] thanks for that, sir.

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[Foreign Language] this FY '25, we should be doing somewhere around INR 60 crores, INR 65 crores. And next year, [Foreign Language] tentatively INR 80 crores, INR 85 crores.

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[Foreign Language] These all factors will work in our favor.

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[Foreign Language] calculation, you always cost -- this calculate close to 4% as a hedging cost.

[Foreign Language] 4% as a hedging cost. [Foreign Language]

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[Foreign Language] we will be more competitive.

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We take the next question from the line of Raman KV from Sequent Investments.

Congratulations on good set of numbers. Sir, I just wanted to understand how sulphuric acid prices have panned out in the last 4, 5 months?

[Foreign Language] Sulfur has been also behaving in a similar manner. [Foreign Language] So this is in line. Let me tell you whatever the increase of the sulfur prices have been there impacted into the market, the same kind of result or that we have been able to pass on the cost of sulfur to our acid business.

So you have been able to pass on the prices.

We are able to. We are able to.

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[Foreign Language] We don't have refinery business. We source it from outside.

[Foreign Language] how do I say, every quarter or every month?

[Foreign Language] either you want to supply sulphur to the company or you are into sulphur bases.

[Foreign Language] I just wanted to understand sulphur prices impact.

[Foreign Language] it mainly into the imports, and it is a continuous effort. It's a continuous input of the material. [Foreign Language] in that time, we go into the market and buy locally. Liability of sulphur is onto the imports because we are almost equity [indiscernible] so whenever we calculate and buy sulphur, we always calculate the net of the moderate lending price at plant. So looking at the transport, another cost, you always see that the import is more vital, a, because of the price; b, because of logistically also, since we consume almost 4,000 tonnes of sulphur in a month, [Foreign Language] So therefore, we always prefer imports.

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[Foreign Language] I wouldn't like to comment on any such opinions about the competition.

Okay. Sir, what are the margins with respect to Fertiliser business and Chemical business EBITDA margin?

[Foreign Language] because ours is a consolidated business. So it is difficult to take out the intermediate dyes, fertiliser, animal health, acid. [Foreign Language] we have a consol margin practice. So we don't have any such independent because the whole operation is consolidated.

As there are no questions, I now hand the conference over to Mr. Punit Makharia, Chairman and Managing Director, for his closing comments.

Thank you, everyone, for joining our Q3 and 9 months FY 2025 earnings call. If you have any further questions, please feel free to contact our Investor Relations adviser Churchgate Partners, and we'll be greatly happy to address you. Thank you, gentlemen. Thank you, friends.

On behalf of Shree Pushkar Chemicals & Fertilisers Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.