GNFC Q4 FY26 PAT Up 35% YoY, Declares INR21 Dividend

The call was hosted by Anurag Services LLP. The following GNFC management members were present:

Profit After Tax (PAT): INR 797 crores, an increase of 35% Year-on-Year (YoY).
Profit Before Tax (PBT): INR 1,065 crores.
One-time gains: INR 80 crores for FY26, compared to INR 38 crores in the previous year. The net increase in one-time gains is approximately INR 45 crores.
Dividend: The Board declared a dividend of 210%, which is INR 21 per share. This is noted as the second-highest dividend in the company's 50-year history.

Revenue: Increased by 11% Quarter-on-Quarter (QoQ) and 7% YoY.
One-time gains: INR 30 crores.
Segment Performance: The improvement in profitability was mainly driven by the Chemicals segment. The 'Other' segment, primarily the IT division, saw revenue grow by ~20% and profit double from INR 17 crores to INR 35 crores.

Management provided the following production figures for FY26:

Ammonia (Oil route): ~300,000 Metric Tons (MT)
Ammonia (Gas route): ~360,000 MT
Concentrated Nitric Acid (CNA): ~147,000 MT (Approx. 45% was sold externally)
Weak Nitric Acid (WNA): ~430,000 MT
TDI: ~57,000 MT
Formic Acid: ~34,000 MT
Ammonium Nitrate (AN) Melt: ~170,000 MT (This figure includes both direct synthesis and by-product)
All produced ammonia was used captively; no external purchases were made in Q4.

Chemicals: Production volumes for acetic acid were capped due to internal issues. Methanol production was not economically viable due to very high gas prices, rendering even the oil-based methanol plant unviable.
Fertilizers: The volume of Neem Urea and TDI was slightly impacted in late February/early March due to the war. This was compensated by increasing production of Technical Grade Urea (TGU), which saw production double in March to support national logistics needs. GNFC is the primary manufacturer of high-quality TGU.
Technical Grade Urea (TGU): The company has the flexibility to produce up to 20% of its total urea output as TGU. FY26 TGU production exceeded 210,000 MT against a nameplate capacity of 169,000 MT.
Capacity Utilization: Most plants, including acetic acid, are running above 100% capacity utilization. The TDI plant is operating close to 80%, which is stated to be in line with the global benchmark for such complex plants.

Oil: Supplied by Indian Oil Corporation Limited (IOCL) under a formula-linked contract. Prices saw a net reduction of ~INR 3,000/MT in Q4 vs. Q3 but increased significantly in April 2026 due to the war and related geopolitical tensions affecting the Strait of Hormuz.
Benzene & Toluene: Short-term contract extensions were secured post-FY26. Availability is not an issue, but prices have spiked.
Methanol & Acetic Acid: High volatility. The company employs a flexible strategy, procuring methanol or acetic acid from the market based on whichever is more economically viable for producing downstream products like ethyl acetate.
Product Realizations: In Q4, realizations improved sequentially (QoQ) by 6% to 28% for all chemical products except Formic Acid. Ammonium Nitrate prices improved by ~20% QoQ.

FY27 Capex Outlay: INR 2,800 crores.
Coal-Based CCPP (Power Plant): Faced delays from the lump-sum turnkey contractor. Synchronization is now expected in the third week of June 2026, with performance guarantee tests and full operation expected by the third week of August 2026. The estimated saving from this project is INR 10-12 crores per month.
Ammonia Expansion, Weak Nitric Acid, Ammonium Nitrate Projects: All are on track, with a minor 2.5-month delay specifically for the Weak Nitric Acid project. All are expected to be operational in FY28.
New Projects & INEOS JV: The previously planned Joint Venture with INEOS is now being discussed as a licensing deal for additional capacity. Clarity on new project identification is expected by the end of the calendar year 2026.

Fertilizer Segment (Urea): The segment is currently loss-making. A revision of the fixed cost and energy consumption norms by the Department of Fertilizers is overdue but remains under discussion with no formal communication received.
Aniline Business: Faces significant competitive pressure from Chinese imports/dumping, despite anti-dumping duties, due to their massive scale and coal-based hydrogen production. GNFC operates part of its aniline capacity on a job-work basis with fixed margins.
Ammonium Nitrate Market: The domestic market has a CAGR of 6-7%. Current imports of ~400,000-450,000 MT are expected to be replaced by domestic production from GNFC, Chambal, and Deepak Fertilisers. Demand is underpinned by the government's thrust on coal mining and coal-based chemicals.

AT Kearney Consultancy: Cost-saving initiatives are underway, with some savings already realized in oil procurement. Full reconciliation of savings will occur upon completion of the assignment.
Inter-Corporate Deposits: The significant increase in 'Loans and Advances' on the balance sheet (to ~INR 2,400 crores) is due to the deployment of temporary cash surpluses in inter-corporate deposits with Public Sector Undertakings (PSUs) at an interest rate of ~7.25%.
Buyback: There are no current plans for a share buyback.
Urea Investment Policy: The management will evaluate a new urea investment policy only once details are announced by the government, comparing it to other investment opportunities in the unregulated chemical sector.