Rashtriya Chemicals and Fertilizers Ltd's (RCF) standalone revenue for Q2FY19 came in at Rs2,321.5cr, up by 29.2% yoy. The operating profit for the quarter came in at Rs95.8cr, up significantly by 49.7% yoy. The EBITDA margin expanded by ~57bps yoy to 4.1% in Q2FY19. The net profit after tax for Q2FY19 came in at Rs17.8cr, up 65% yoy.
• RCF’s performance during the quarter is driven by higher sales volumes across both the segments of fertilizers and industrial chemicals. However, industrial chemicals have witnessed likely headwinds in form of inflationary raw material prices coupled with rupee depreciation.
• Gross margin for Q2FY19 overall remained stable at 52.4% (52.8% in Q2FY18). This is on account of shift in product mix towards fertilizers, which have yielded higher value as compared to industrial chemicals. The strong performance in fertilizer segment has offset the subdued gross margin under industrial chemicals.
• EBITDA margin expanded marginally by ~57bps yoy to 4.1% in Q2FY19 on account of higher operating leverage. This is on account of recovery of margin under fertilizers segment. However, power & fuel cost shot up ~34% yoy to Rs703.8cr on account of rising crude oil prices and volatility in currency.
• Finance cost increased significantly to Rs37.6cr in Q2FY19 vs. Rs17.1cr in Q2FY18.
• Fertilizers segment - Revenue increased by 37.6% yoy to Rs2,104.4cr, which is a likely combination of volume growth as well as increase in realization. Segment EBIT stood at Rs104.5cr in Q2FY19 vs. Rs30.1cr, which had a low base effect. EBIT margin is up ~300bps to 5% in Q2FY19.
• Industrial Chemicals segment - Revenue increased by 39.8% yoy to Rs202.6cr in Q2FY19 mainly on account of higher sales volumes, indicating robust demand scenario. However, the company was not able to pass on rising input cost and rupee weakening impact to the customers. This led to an EBIT loss of ~Rs10.1cr in Q2FY19 vs. EBIT of Rs4.3cr in Q2FY18.
• The total borrowing (long and short term) decreased to ~Rs997cr as on September 30, 2018 vs. Rs1,255cr as on March 31, 2018.
Rashtriya Chemicals & Fertilizers Ltd is currently trading at Rs. 64.40, up by 1.75 points or 2.79% from its previous closing of Rs. 62.65 on the BSE.
The scrip opened at Rs. 62.75 and has touched a high and low of Rs. 64.80 and Rs. 62.05 respectively. So far 26,44,672 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.
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