GSFC Q2 Results: Net profit drops 38% as higher raw material costs hit fertiliser margins

Gujarat State Fertilizers & Chemicals Ltd

(GSFC) on Monday (November 2) reported a 38.2% year-on-year (YoY) decline in net profit to ₹200.2 crore for the second quarter, compared with ₹324.1 crore in the corresponding period last year.

Revenue from operations increased 48.8% YoY to ₹4,741 crore from ₹3,187 crore in the year-ago quarter.

Earnings before interest, taxes, depreciation and amortisation (EBITDA), however, declined 58.5% to ₹140 crore from ₹337 crore a year earlier. The EBITDA margin contracted to 3% from 11% in the corresponding quarter last year.

The company reported its highest-ever second-quarter and first-half revenue, with total sales rising 50% year-on-year (YoY) to ₹4,711 crore in Q2FY27 and increasing 56% to ₹8,293 crore in H1FY27. However, the company said growth in the top line was constrained by an unprecedented increase in key raw material prices driven by geopolitical pressures.

The fertiliser segment recorded a 55% YoY increase in sales value in Q2FY27, adding ₹1,386 crore, despite a 6% decline in sales volume to 5.69 lakh metric tonnes (LMT) from 6.08 LMT. The growth was primarily driven by higher diammonium phosphate (DAP) realisations, with DAP revenue increasing by ₹1,659 crore, supported by the government's DAP Special Package to compensate for international price variations.

However, sharp increases in key raw material costs, particularly sulphur, which rose 327%, and natural gas, which increased 62%, significantly affected margins. Earnings before interest and tax (EBIT) of the fertiliser segment fell to ₹17 crore from ₹224 crore in Q2FY26.

The company said urea subsidy rates remain subject to revision following the finalisation of the actual Pool Gas rate by FICC-GAIL, which has been pending since April 2026.

The industrial products segment continued its positive performance, with sales increasing by ₹185 crore, registering 30% growth over Q2FY26. EBIT improved to ₹66 crore from ₹54 crore in the year-ago quarter, supported by better realisations across major products in line with market trends.

Sales of caprolactam and nylon increased by ₹58 crore and ₹60 crore, respectively, mainly due to higher realisations. Anone sales rose by ₹36 crore, driven by higher volumes, while Technical Grade Urea (TGU) sales increased by ₹26 crore. These gains were partly offset by a ₹5 crore decline in melamine sales.

The Capro-Benzene spread improved significantly to $849 per metric tonne (MT) from $512 per MT.

Against heightened geopolitical uncertainty and evolving global supply dynamics, GSFC said it maintained uninterrupted operations and ensured supply continuity during the quarter. While sharp movements in key raw material prices put pressure on profitability, changes in product mix, responsive production planning and timely pricing actions helped mitigate the impact and defend core margins across business segments.

On the capital expenditure front, the company continues to advance projects aligned with its strategic growth roadmap. The C-Train modification for an additional 1,200 metric tonnes per day (MTPD) of Ammonium Phosphate Sulphate (APS) production at its Sikka unit was commissioned on October 23, 2026.

Looking ahead, GSFC expects the Caprolactam-Benzene spread to moderate in Q3FY27 as regional supply normalises, potentially affecting margins across the Caprolactam-Nylon value chain.

Demand for melamine and Technical Grade Urea is expected to remain steady, while HX Crystal exports could improve amid subdued domestic demand. Other industrial products are projected to maintain steady demand and provide baseline stability to the segment.

For Q3, the company plans to prioritise operational efficiency, an optimal product mix, sharper inventory management and timely market supplies. It also aims to strengthen channel competitiveness while protecting sales realisations and profitability through a proactive and disciplined approach.

Shares of Gujarat State Fertilizers Chemicals Ltd ended at ₹136.05, up by ₹2.55, or 1.91%, on the BSE.