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

Ladies and gentlemen, good day, and welcome to the Q4 FY '25 Earnings Conference Call of Shree Pushkar Chemicals & Fertilisers. Before we begin, I would like to remind all participants that some of the statements or comments made on today's call may be forward-looking in nature. These may include but are not necessarily limited to the financial projections or other statements of the company's plans, objectives, expectations or intentions. The company disclaims any obligation to update these forward-looking statements to reflect future events or developments. Kindly refer to Slide #19 of the earnings presentation for a detailed disclaimer. [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 of Shree Pushkar Chemicals & Fertilisers Limited. Thank you, and over to you, sir. Hello. Sir, please go ahead.

Hello, can you hear me?

Yes. Please go ahead now.

Good evening, everyone, and we welcome all the participants to Shree Pushkar Chemicals & Fertilisers Limited's Q4 FY 2025 Earnings 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 all, and thank you for joining Q4 and FY '25 earnings call of our company, Shree Pushkar Chemicals & Fertilisers Limited. Friends, I hope you had an opportunity to go through our financial results and investor presentation, which are available on the exchange, as well as on our company website. As we bring FY '25 to a close, I'm pleased to share that the company has delivered consistent performance, both financially and operationally, supported by our focus on execution, internal accrual-driven investments and discipline in our cost management. For Q4 FY '25, revenue from operations reached INR 219.4 crores, marking a 15% year-on-year increase segment-wise. The chemical division registered a growth of 19% and fertilizer division advanced by 10.6%. And our EBITDA levels for the quarter came in as INR 24.70 crores, reflecting a 32% rise over Q4 FY '24, with margins expanding to 11.3%, driven by operational efficiencies. Profit after tax increased to INR 16.5 crores up to 27% on year-on-year basis. On a full year basis, we achieved INR 806.3 crores in revenue, representing an 11% increase on FY '24. EBITDA improved to INR 83.90 crores, up to 38%. And net profit moved up from 58% to INR 58.60 crores, supported by volume growth and the price discipline and a stable cost environment. Friends, from a volume perspective, the fertilizer segment recorded 24.4% increase on year-on-year basis, closing FY '25 at 2.61 lakh metric tons for the whole year. Meanwhile, our chemical segment remained largely steady with volume at 0.57 lakh metric tons, marginally lower on a year-on-year basis. We made continued progress on our sustainability and expansion agenda. During the quarter, we commissioned an additional 3.8-megawatt DC solar power plant, taking the total solar capacity to 9 megawatt DC. In parallel, site development at Unit 6 is also progressing as planned. We have also initiated work on a 10-megawatt DC solar plant in Nanded for our captive consumption under the open [Technical Difficulty]

Sorry to interrupt, sir, you are not audible. Hello sir, are you there? Ladies and gentlemen, there has been -- the management line has dropped. I would request you to stay online while I get them reconnected. Thank you. [Audio Gap] Ladies and gentlemen, the management has been reconnected. Please go ahead, sir.

Sorry, gentlemen, for the disconnection of the line. Anyway, let's continue. In terms of capital expenditure, we have successfully completed a cumulative CapEx of INR 202 crores, funded entirely through the internal accruals. These investments were focused on expanding manufacturing capacity, deepening integration across the value chain and enhancing product offerings in both chemicals and fertilizers. A further planned CapEx of INR 160 crores is underway, out of which INR 72 crores is already incurred as on 31st March 2025, totally through the internal accruals. We continue to operate with a strong balance sheet. Our net cash positive is backed with INR 116.55 crores on non-lien deposits, giving us the financial ability to support our growth road map. Looking ahead, our focus remains on operational optimization, capacity enhancement and expanding our reach across high-demand regions. We are optimistic about the long-term fundamentals of the sectors we operate in and are confident of our ability to deliver consistent performance, backed by our integrated business model and disciplined execution. With this, I would like to invite Mr. Deepak Beriwala, our CFO, to share detailed insight into the financial and operational performance for the quarter and full year. Over to you, Deepak.

Thank you, sir. Good evening, everyone, and thank you for joining us today. I will now take you through the detailed financial and operational performance of the company for the quarter and full year-ended 31st March 2025. Starting with the quarterly performance, in Q4 FY '25, we achieved revenue from operation of INR 219 crores, marking a growth of 15% on a year-on-year basis. This growth was largely supported by a combination of volume gain in fertilizer and pricing [ realized ] in the chemical segment. Our gross profit during the quarter was INR 85.2 crores, reflecting a 34.9% increase, with the gross margin expanding to 38.8% compared to 33.1% in Q4 FY '24. This margin improvement reflects favorable cost dynamics, improved capacity utilization and a better product mix. EBITDA for the quarter reduced -- reached to INR 24.7 crores, an increase of 31.9% over the same period last year. The EBITDA margin was 11.3%, indicating a continuous focus on operational efficiency. Profit before tax improved to INR 20.4 crores, up 28.4%, while net profit for the quarter amounted to INR 16.5 crores, up by 26.5% year-on-year basis, resulting in a PAT margin of 7.5%. The quarter reflects consistent execution and financial discipline across the business. Turning to the volume performance in Q4, the fertilizer division recorded sales of 60,000 metric tons, reflecting a 5% increase over Q4 FY '24. The chemical division delivered 10,000 metric tons, reflecting a decline of 11% on year-on-year basis. The overall consolidated volume during the quarter was 70,000 metric tons, marking a modest increase of 2%. For the full year 2025, revenue from operation reached INR 806 crores, representing a growth of 11% over FY '24. Gross profit increased by 21.1% to INR 296 crores and gross margin improved to 36.8%. EBITDA for the year came in INR 83.9 crores, higher by 38% with a margin of 10.4%, up from 8.4% in the previous year. Profit before tax rose to INR 69.7 crores, a growth of 44.5%, while the net profit advanced to INR 58.6 crores, an increase over FY '24, resulting in a PAT margin of 7.2%. The annual volume in the fertilizer segment reached 2.61 lakh metric tons, marking a 24% growth over FY '24. Chemical volumes remained relatively stable at 56,000 metric ton, marginally lower by 1% year-on-year basis. On a consolidated basis, total volume for the year was 3.17 lakh metric ton, reflecting an overall increase of 18%. Segmental revenue for FY '25 reflects INR 424 crores revenue from chemical division, an increase by 7%, and INR 381 crores from the fertilizer division, 15.8% year-on-year basis. The performance was supported by the sustained demand in the core agriculture markets and consistent output across our manufacturing facility. On the cost side, material consumption for the year was INR 557 crores. We maintained discipline across working capital components, including inventories and receivables. Total employee benefit expenses were INR 51.3 crores. Other operating expenses totaled INR 161 crores. Finance cost for the year was limited to INR 2.3 crores, reflecting our low leverages position. From a balance sheet perspective, our equity base increased to INR 538 crores, backed by the improved earnings. We closed the year with INR 196 crores investment and cash balance. Net cash from the operating improved significantly to INR 37.5 crores from INR 16.2 crores in FY '24, driven by the improved profitability and efficient capital management. In summary, FY '24 reflects consistent financial progress, driven by the operational focus, disciplined cost structures and a stable business model. We remain focused on delivering sustained volume growth performance and product financial stabilities. With this, I now open the floor for questions. Thank you, sir.

[Operator Instructions] The first question comes from the line of Prit Nagersheth from Wealth Finvisor.

Yes, sure. Sir, congratulations on a good set of numbers. My question is related to the kind of volumes that I'm seeing from the chemical division from Q3 to Q4, which has dropped, and it corresponds with a very high inventory buildup also of, I think, INR 160 crores or so. So sir, can you explain what is happening? Because on one side, the Q4 revenues in chemicals have gone up by 10%, 11% over Q3. But volumes have dropped. Their inventory has increased. So what has really happened here?

I understand your question, Prit. Let us take this -- let us divide this question in 2 different parts: A, that the chemical business has gone down tremendously. The chemical business includes our acid complex also. And let me tell you, Prit, especially this particular time, this particular year, unfortunately, our shutdown continued for almost 2 to 2.5 months in our acid complex. Generally, this shutdown is always kept up to a level of 30 to 35 days. But because of some unseen circumstances, there was some major work which came up suddenly beyond our expectation, which took a bit longer time for restarting the plant. And generally, in the acid complex, it has been seen that every year, the plant is under shutdown for the annual maintenance for 30 to 35 days. But now, this time, it continued for almost 52 to 53 days almost. So A, that's a major issue in dropping our volumes into the acid business. Rather, let me also add one more point here is that since this plant continued for a longer shutdown period, we had to buy the acids from outside because we want to keep our other operations operating. Because of nonavailability of acid, we cannot shut our other plants also. Other plants started well on time, but particularly this acid plant went on for shutdown for almost 52, 53 days. So during additional almost 25, 27 days, we had to buy even the raw material from outside also. So A, this is the reason. Now, B, coming to your inventory levels, we have bought sufficient rock phosphate, particularly for coming season of fertilizers in the month of February and March. We generally don't buy this much of quantity, but we thought, and we saw that right now, the rock phosphate, which is our major raw material, is at the bottom of its level in the last 1 or 2 years or so. Therefore, we bought excessive of rock phosphate for our future requirement also for the fertilizer season. Otherwise, this inventory, we generally don't buy at this point of time. We generally buy this inventory somewhere in April and May. But we preponed our buying for almost 2 months because we were getting a good deal in rock phosphate business. So mainly because of that, you can see that, yes, there is inventory buildup in this particular year.

So, Punitji, the question is that in spite of this, you reported 10%, 11% increase in top line in the chemical side over Q3 despite the drop in volumes.

[indiscernible] prices have improved. If you remember, in my last con call, I had mentioned that I see this improvement into the whole business cycle. And mainly because of that, the prices have improved. And if you see, in comparison with Q3 FY '25 and Q4 FY '24, almost INR 10 crores of dyes intermediates we have sold, wherein the quantity increment in comparison with Q3 and Q4, there is an increment of around 300 tonnes. Almost 10% to 11% of more intermediates has been sold at a much better pricing. [indiscernible]

Right. So sir, can we now say moving forward to Q1 that this problem of the shutdown has been solved. So we should see our chemical volumes back on track with much better pricing.

Sure. Generally, the shutdown is always this -- once in a year. It's not regular until and unless something major comes up.

Sir is the shutdown -- so you are saying it is completed and now working properly. So we should see the full benefit of this pricing in this quarter?

Yes. Now, that impact will be in Q1 of this current financial year.

Okay. So you will see that increase in top line. Okay. So sir, the other question I had was regarding the BIS. So there has been a deferment of 2 products to August and 1 product to next year for -- so how does that impact you, sir?

It doesn't impact much, Prit, because let me tell you, as far as the 2 products which you are mentioning here is the K Acid and Vinyl Sulphone. If you look at the current Chinese import price and current Indian price, hardly anybody imports from China for the last couple of months. We are having a close watch on that. And secondly, 3 months extension is not a major extension, Prit.

I think the K Acid is next year, right?

K Acid has gone till next year, till 13th of May 2026. We are doing necessary presentation -- representation to the ministry. Let's see how the ministry decides on this part.

Right. But you don't see any change in business fundamentals for your -- this year because of this thing?

Let me tell you, BIS, we were expecting some betterment. At the worst, K Acid betterment will come after a year or so. Nothing so great impact because of the extension of BIS.

Correct. So then Punitji, what is your guidance for FY '26 and FY '27, if you can shed some light?

I think, '25-'26, I am projecting total revenue somewhere close to INR 950 crores, INR 1,000 crores or so because mainly 2, 3 reasons. And you know that I'm a bit conservative always in giving numbers from my side, mainly because of 2, 3 reasons. A, we are starting our dyes unit in Unit 5 very shortly. By the end of May, we are taking a trial batch. It may take around 3 months for the -- this teething trouble, bottlenecks, establish of the plant and quality and other operational issues. So at least for the last 6 months, we will have this operational efficiency of dyes unit also in Unit 6 -- Unit 5, sorry. And we also see trial production of Unit 6 also somewhere near Diwali, maybe October, November 2025. So we might get some revenues from that also. Thirdly, we are expecting better realization, better volumes in chemicals, as well as in fertilizers. So if I put up all put together, I think we should be easily able to achieve at least INR 1,000 crores of the business in '25-'26, as well as the margins are also improving slowly and gradually. '24-'25, we improved around 33% of the margins. We came to around 7.25% to 7.5% on the PAT level. I believe, in this current financial year, company should be -- this company should be able to achieve at least, again, 20% growth levels as we did last time, 58% growth levels. And in this current financial year in comparison to '24-'25, I believe that we should be having at least 8.25% to 8.5% of the margin. This is my outlook on this current financial year.

Right, sir. Sir, one question I had was on the tax rate. So the tax that we are applying is -- for this financial year was 19%. Generally, the tax rate is 25% for corporates. So what kind of tax -- why is it so low?

Sir, in Madhya Bharat, we are having carry-forward losses because we bought this unit through NCLT. It was having carry-forward losses. And Pushkar is having, under MAT -- because if you are aware that we are continuously on expansion mode. We completed INR 175 crores of CapEx through internal accruals. Now again, we are building up new capacities also. So, that depreciation is also accumulated. So we are under MAT in Pushkar. And in Kisan, we are having 25%. So if you put all together, this is the final impact of the taxation.

So sir, for next year, we should still continue to see similar percentage, 16%, 17% tax rate for year?

Almost.

[Operator Instructions] The next question comes from the line of Manan Poladia from MKP Securities.

Sir, first of all, congratulations on the good set. Sir, my question is -- sir, my question is with respect to the CapEx. You said we have about INR 160 crores. We've done INR 72 crores. So we have another INR 88-odd-so crores of CapEx left, right? After that, our cash balance, if we net off from our current cash balance, we'll have about INR 30 crores or INR 40 crores left. Am I right in that assumption? Hello? [Technical Difficulty]

[Audio Gap] Ladies and gentlemen, the management has been connected.

So my question was with respect to the cash balance post the CapEx. My understanding is we have about INR 116 crores of cash and INR 88 crores of CapEx, right? So apart from the cash flow that we will get this year, our net of CapEx planned, cash balance will be about INR 38 crores?

That's right, plus the addition during the coming year.

Right, sir. And sir, my second question was with respect to SSP prices and pickup. Have we been seeing a larger adoption of SSP right now, like since the government has raised the subsidy, I believe, about 40% or so? So are we seeing that impact our demand?

Definitely, Manan, because of the DAP is extremely in shortage. And let me tell you, the phosphatic fertilizer across the globe is in deep shortage, and the prices of like phosphoric acid and DAP has gone up tremendously. So I believe it's a good opportunity, especially for the SSP business. Because of the increase in subsidy, there would be an increased demand also because of the shortage of other phosphatic fertilizer also. So I believe that there would be a good time in coming this season.

Right. And just one follow-up on the acid side. Sulfur prices have gone up significantly, right? And are we seeing that we are getting better spreads overall in the market for sulfuric acid?

See, we are having our own plants for sulfuric acid. Definitely, sulfur has gone up, and this has behaved unexpectedly on the upward side. [Technical Difficulty]

Ladies and gentlemen, the management has been disconnected. I would request you all to stay online while I get them reconnected. [Audio Gap] Ladies and gentlemen, the management has been reconnected.

Yes, please. Mananji?

No, sir, I'm done with my questions. You've answered all of them.

The next question comes from the line of Aditya Sen from Findoc Finvest.

Hope I'm audible.

Aditya, please speak a little louder.

Is it any better now?

Yes, better now.

So sir, can you please help me with the total revenue potential of Unit 5 and Unit 6 combined?

Aditya, Unit 6 is not yet operational. It is under implementation. And as far as the sales of Unit 5 is concerned, we don't maintain separate records for unit-wise. We maintain the separate details for the vertical-wise, Aditya. So I don't think it is -- we have readily available sales volume of Unit 5.

No, I'm not asking for the existing volumes. I'm asking about the revenue potential that these 2 units can generate.

Unit 5 can generate; this is what your question is?

Yes, both Unit 5 and Unit 6.

See, Unit 5, I need to calculate and give it to you, Aditya. Right now, I'm not handy with me, right? And as far as Unit 6 is concerned, this is a total capacity of 500 tonnes per day of NPK complex. And I believe that if we take hardly 70%, 75% capacity also, then I think this unit should give somewhere close to INR 450 crores revenue for the whole year once it is operational.

And it should be optimally utilized in FY '27 because by the end of this year, as you said, we'll commission.

It should be utilizable in '26-'27. Yes.

Yes. Okay. So we are looking for that. And also, I see -- that's a manual question. Finance cost spiked to INR 1 crores this quarter. So is this going to sustain going forward? Or was it a one-off?

Yes. There is no long-term borrowings for our new CapEx. Only there will be an incremental -- there may be an incremental borrowing for our working capital requirements. And like -- you can take like this that as of now, out of total this INR 800 crores of the sales, the total finance cost is around INR 2 crores. So this is hardly 0.25% of the total revenue volumes. I think it should be in a similar range. Let's see. Once we start the new plants, probably our requirement would be more in terms of working capital. But I think it should not be -- this should be around 1% of the total revenue, which will not be a major impact.

The next question comes from the line of Ankur Kumar from Alpha Capital.

Congrats for a good set of numbers. My question, sir, is on the fertilizer side. We saw 24% type of volume growth this year. So given increased improvement in the SSPs, how are we thinking about this current season, sir, first half of this year, FY '26?

Ankur, very honestly, let me share with you, we had planned much better targets in fertilizer as far as '24-'25 is concerned. We had planned for total sales of 300,000 tonnes, wherein we couldn't achieve 300,000 tonnes. We were left at 260,000 tonnes only. In this particular year, we believe looking at the present situation of the phosphatic fertilizers globally, in my opinion, we should be able to achieve at least this target, what we had planned for the last year. So I still see that there would be 20% increase in the fertilizer business as far as this particular season is concerned. We have already started doing our best disc cornering each and every corner of our volumes, our dealers and our marketing strategies. So I believe that this season, we should be able to do around 150,000 tonnes of fertilizer in this particular season.

Got it, sir. And sir, you talked about scope of margin improvement in chemicals because the selling price has gone up. So what is our thought on the fertilizer side?

Things would be better in both the sector. As I mentioned in this con call itself that this current financial year, we would be doing at least 20% better in terms of the PAT levels what we did in '24-'25.

Yes, sir, you can even...

My outlook, we should be able to achieve at least 8.5% to -- near to the percentage in the PAT levels. And the total revenue levels, we are expecting around INR 1,000 crores.

Got it, sir. Sir, even in last call, I think you said about INR 60 crore PAT for this year, which we were able to do. So congrats on that. And yes, INR 80 crores is what you are saying for this year.

[Operator Instructions] The next question comes from the line of Saket Kapoor from Kapoor & Company.

Sir, firstly, when you mentioned about the rock phosphate prices and being at rock bottom, and how have the price trends been post February when we have purchased? And if you could give some more color? And second question was, sir, if you could give us some more brief understanding how the current market dynamics are for our chemical segment, in particular? You spoke about fertilizer. So if you could just outline more because our line got disrupted many times. So kindly repeat the same, sir.

[Foreign Language] We bought at levels of almost [Foreign Language] for our coming this season. And from thereafter, now I see that [Foreign Language] that has still improved to 5% to 7% level [Foreign Language]. And maybe because of some year-end target, might be, the sellers of the rock phosphate, they have to complete certain yearly targets. So they might have sold it at a better price. And now the prices have improved to some extent, right? But still, I consider that the prices are the cheapest one as of now also. Now, as far as your chemical margins are concerned, right now, [Foreign Language]. Now the prices have come to a level the other consumers are fighting away for BIS introduction, which government has already postponed it for next 3 months. [Foreign Language] If ask to the Chinese for giving a price of India, they even don't want to offer the products to India also because they know very well [Foreign Language]. So things are improving in our favor in coming times. [Foreign Language] situation is going to be better. As I mentioned earlier, I gave outlook as far as the revenue and profitability is concerned. This is slowly and gradually building up our confidence that we will be able to achieve what we are saying on this call. And you have seen earlier also that I am bit conservative person. [Foreign Language]

[Foreign Language]

[Foreign Language] open and transparent and in the most ethical mode to share my views, to share my experiences, to share my learnings with you all guys. [Foreign Language] that I share with you all guys. [Foreign Language]

[Foreign Language] financial questions. As you mentioned that we have purchased acid from external sources. So other expenses have also gone up sequentially, although the volume was lower. So what will you attribute this INR 4 crores, INR 5 crores change Q-on-Q basis? When we look at the other expenses, it was INR 41 crores for December quarter, and it moved up to...

[Foreign Language]

[Foreign Language] It has increased from INR 41 crores to INR 46 crores. It has gone up by INR 5 crores.

[Foreign Language]

[Foreign Language] percentage of sales or business we are doing with the country of Bangladesh, and how are we aligned to it? Sir, am I there? Hello? [Technical Difficulty]

Ladies and gentlemen, the management line has dropped. I would request you to stay online until I get them connected. [Audio Gap] Ladies and gentlemen, the management is reconnected. Please go ahead, sir.

Sir, shall I repeat my question?

Yes, please.

Yes, sir. Sir, we are looking at strained relationship with Bangladesh, and the commentary which we heard today or read in the newspaper states that there may be some disruption in terms of the trade relations. So [Foreign Language] total sales, what are -- how are we -- as a customer, we have relations with the country. And what could be the impact going ahead, sir?

I have mentioned in my last calls also, when initially this disturbance in Bangladesh internally started, our total volume with Bangladesh is hardly INR 30 crores, INR 35 crores annually, right, which is hardly 4% of the total business. Even after their internal [ disturbances ] also, we haven't seen much impact on the business. And still my confidence level has that it has got no -- this will not have major impact on our relationships with Bangladesh. And I believe that on a longer term, I don't see any major disturbance also. In case if there is also, in coming future, which I personally don't foresee, then we have other -- the markets also to look into those and build up our sales volume there also. In case our government comes in the future in such kind of a strategy where the trade with Bangladesh is totally banned, then obviously, we will respect the government policy decision, and we are with that. But as far as the business is concerned, I don't think in case Bangladesh gets closed -- let us take the worst part level, the Bangladesh gets totally closed, right, then we have other areas also for the marketing development like we are looking at Vietnam market. We are looking at Indonesia market. We are looking at Sri Lankan market. We are -- slowly and gradually, we are developing this Egyptian market. So we are -- our team is going in those markets also and getting more opportunities in our customer levels. So I don't think that Bangladesh or Turkey is going to affect very majorly for us. It could be very on short-term basis, but nothing I see on a longer-term basis.

Okay. Sir, another point was about the caustic soda plant investment. I think so we were on the verge of...

Last time, we mentioned [Foreign Language] because it's always better to review your decisions. And very importantly, we need to take very conscious decisions, any such decisions, which is good for the company on a longer-term business. I personally believe that we can always review our decisions. And after reviewing the decisions, we found that caustic is not so great. So we got some other opportunities also, and we went into that direction.

Okay. And lastly, sir, although it may not be of that important in terms of the financial or operational performance, but we also saw some promoter inter-transfer of equity from you and I think Gautamji to one -- another entity.

To my mother.

To Madam Bhanu.

Yes, she is my mother. We are in the process of making a family trust. So the equity transfer to my mother is a part of the process for our entire equity, we are transferring to the family trust for a long-term succession plan, for a better stability and this long-term sustainability.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Punit Makharia, Chairman and Managing Director, for the closing remarks.

Thank you, everyone, for joining our Q4 and FY '25 earnings call. If you have any further questions, please feel free to connect us with our Investor Relations adviser, Churchgate Partners, and we'll be happy to address all your queries. Thank you, friends, and stay safe. Thank you very much.

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