Paradeep Phosphates delivers a strong quarter with a 36% revenue increase, but warns that margins may soften as inventory benefits diminish, amid ongoing diversification plans and market challenges.
Paradeep Phosphates has just delivered one of its strongest quarters in recent memory, but the company itself is signalling that investors should not treat the result as a new normal. According to its latest quarterly disclosures, revenue rose 36% year on year in the June quarter to ₹6,124 crore, while profit after tax climbed 24% to ₹393 crore. Sales volumes increased 4% to 9.85 lakh tonnes, even though the broader phosphatic fertiliser market was largely flat, helping the company extend its share in a difficult industry backdrop.
That outperformance was not driven by demand alone. Management has pointed to a favourable inventory position, built before raw material costs jumped, as a major reason margins improved in the quarter. EBITDA per tonne reached roughly ₹7,000, compared with about ₹6,500 a year earlier, but the company has cautioned that this level is unlikely to hold through the year. It is guiding to a more realistic figure of around ₹5,000 per tonne for FY27, with higher margins expected only after current backward-integration projects begin to feed through.
The company’s volume mix also shifted in a way that favoured profitability. Phosphatic sales rose about 6.1% year on year, while direct farmer sales increased 15% to 16%, according to management commentary in Trade Brains. DAP volumes surged 55%, while NPK volumes fell 9% as the company leaned towards the more attractive product in a market where DAP remains far cheaper than complex fertilisers. Compounding AI said the quarter also saw margin pressure from a 43% increase in raw material costs, even as earnings still improved.
Looking ahead, investors are likely to focus less on the headline growth rate and more on whether Paradeep can sustain its gains once the low-cost inventory benefit fades. The company is still exposed to spot-market sulphur purchases, leaving it vulnerable to price swings, and it had ₹4,600 crore of unpaid government subsidy at the end of June. At the same time, it is trying to diversify. The board has approved a ₹250 crore aluminium fluoride project, which management says could generate ₹180 crore to ₹200 crore in annual revenue, while larger phosphoric acid expansion plans and a longer-term capital programme remain key milestones for the next few years.
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