Gujarat State Fertilizers & Chemicals Ltd's Q4FY18 standalone net profit declines 16.37% yoy to Rs156.41cr : Beats Estimates

The company’s standalone revenue stood at Rs2,055.26cr, up 33.3% yoy and 33.68% qoq.

May 16, 2018 01:05 IST India Infoline Research Team

Gujarat State Fertilizers & Chemicals Ltd Q4FY18

Standalone Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
Revenue 2,055.26 33.3
EBITDA 226.93 97.5
EBITDA Margin (%) 11 359
Net Profit (adjusted) 156.41 [16.4]
***EBITDA margin change is bps


Reco. Price


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Gujarat State Fertilizers & Chemicals Limited's revenue for the Q4FY18 came in at Rs2,055.26cr, up by 33.3% yoy. The operating profit for the quarter came in at Rs226.93cr, which increased substantially by 97.5% yoy. The EBITDA margin expanded by ~359bps to 11% in Q4FY18. The net profit for the quarter stood at Rs156.41cr, down by 16.4% yoy. The revenue, operating profit and net profit beats the street estimates by 15%, 20% and 38%.

• The company witnessed a volume growth of 30% yoy under fertilizers segment. It further benefitted from escalation of urea concession rate by the government. The fertilizer segment was also benefitted from shift in product mix towards the high-realization NPK fertilizers, and increase in fertilizer prices.
• The industrial products segment benefitted from higher sales of caprolactam. Management mentioned that spreads on caprolactam have increased, from US$765/tonne in FY17 to ~US$1,000/tonne in FY18. Currently, the spreads are ~US$1,200/tonne, which the management believes may come down if crude oil prices correct.
• The prices of phosphoric acid have increased, from US$567/tonne in Q3FY18 to $678/tonne in Q4FY18, and are currently in excess of US$700/tonne. Further, rupee depreciation has led to further rise in the raw material price for the company during the quarter. GSFC has undertaken increase in price of fertilizers, to the tune of Rs2,000/tonne in February 2018, followed by Rs1,000/tonne in May 2018.
• Management guided to sales volume of 2.5mn tonnes for FY19 and 3.0mn tonnes for FY20.
• The gross profit margin of the company declined by ~193bps yoy to 32.9% in Q4FY18. However, on account of operating leverage coupled with stable employee benefits and other expenses, the company witnessed expansion of EBITDA margin by ~359 yoy to 11.0% in Q4FY18.
• Company has written back excess tax provision amounting to Rs99.87cr in respect of AY2006-07 to AY2009-10 claiming deduction u/s 80-IA for its captive power plants. The interest liability of Rs7.32cr has been accounted as finance cost in Q3FY18. Overall, it has resulted into significant increase in the net profit of the company for the quarter.
• Revenue from fertilizer segment increased by 36.2% yoy to Rs1,523.08cr whereas segment EBIT increased by 264.7% yoy to Rs127.52cr, in Q4FY18. The EBIT margin improved by ~525bps yoy to 8.4% in Q4FY18.
• Segment revenue for industrial products increased by 9.0% yoy to Rs532.18cr whereas segment EBIT increased by 3.1% to Rs65.13cr. The EBIT margin declined by ~70bps yoy to 12.2% in Q4FY18.
• Total debt of the company (long term and short term) increased to ~Rs1,041cr as on March 31, 2018 as against ~Rs753cr as on March 31, 2017.
• The outstanding subsidy receivable for ammonium sulphate as on March 31, 2018 stands at Rs689.32cr.
• Management highlighted that there is shortage in number of point-of-sale machines to cater direct benefit transfer (DBT) scheme. Further, there are delays in receipt of subsidy from the government.
• The company’s 40,000 tonnes per annum of melamine project at an investment of ~Rs900cr is expected to be commissioned by September, 2018. At peak utilization, the project can generate ~Rs400cr of revenue at around 20% EBIT margin.
• In order to attain backward integration in fertilizer business, the company plans to set up a 3 lakh tonnes per annum phosphoric acid plant. The total amount of investment would be Rs1,500cr. Management mentioned that the project can add ~Rs3,000/tonne of benefit to DAP margin. The company is expected to make the announcement of the project in FY19.
• GSFC has entered into a joint venture for sourcing rock phosphate for the phosphoric acid plant. It has signed a MoU with Centrex Metals Limited, Australia for this purpose.
Technical View:

Gujarat State Fertilizers & Chemicals Ltd ended at Rs. 131.60, down by 0 points or 0% from its previous closing of Rs. 131.60 on the BSE.
The scrip opened at Rs. 132 and touched a high and low of Rs. 133.10 and Rs. 130.50 respectively. A total of 15,93,400 (NSE+BSE) shares were traded on the counter. The stock traded below its 200 DMA.

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