From Dolly Khanna to the monsoon: Fertiliser stocks are back in focus – Stock Insights News

Super investors don’t just invest, they change the sentiment surrounding entire sectors. When a super investor moves, even dull spaces become interesting. One such figure is Dolly Khanna, the Chennai-based ace investor who is famous for identifying hidden gems early.

In the June quarter 2025, Khanna increased her holding in a sector not usually in the limelight – the fertiliser sector. Prior to Q1 2025 she had 2.18% holding in a fertilizer firm. In Q1 FY25 she increased her holding by another 1.15% holding bringing focus to Karnataka’s largest fertiliser manufacturer.

We are referring to Mangalore Chemicals & Fertilisers (MCF). 

Supported by the UB Group, MCF is mainly involved in the production, acquisition, and sale of fertilizers. It is a subsidiary of Zuari Fertilisers and Chemicals.

MCF posted sales of more than Rs 3,300 crore in FY25 with almost 10% margins and Rs 161 crore net profit. Higher efficiency, richer product mix, and better working capital management are key drivers driving the company. 

Khanna’s action has also contributed to increasing attention on the industry overall just as a healthy monsoon and growing rural earnings are driving demand. What had appeared subsidy-driven and staid is gradually picking up genuine momentum.

In shortlisting the leading fertiliser stocks, we have taken quarterly revenues as the metric, as revenues are the best indicator of size in a subsidy-based industry. To make it relevant for investors, we also limited the universe to fertiliser-specialised companies with a market capitalisation greater than Rs 5,000 crore.

Collectively, they are the most significant fertiliser manufacturers in India and constitute the backbone of the industry. The following are the four companies that make a cut:

Top Fertiliser Companies

Sr No	Name	Q1 FY25 Sales (Rs in Crore)
1	Coromandel International	7,042
2	Chambal Fertilisers	5,698
3	Paradeep Phosphates	3,754
4	Gujarat State Fertilisers  and Chemicals (GSFC)	2,184

Source: Screener.in

#1 Coromandel Fertilisers

Coromandel International, a part of the Murugappa group, is one of India’s leading agri solutions provider. It offers a diverse range of products and services across the farming value chain. It specializes in fertilizers, crop protein, bio pesticide, specialty nutrients, organic fertilisers.

Coromandel International drove India’s fertiliser leadership with a strong Q1 FY26 performance. Consolidated revenue was Rs 7,042 crore, aided by robust subsidy flows and high volumes across businesses. Operating profit increased to Rs 782 crore at 11% margins, and net profit was at Rs 502 crore.

The plants of the company operated at 8.4 lakh tonnes full capacity, while phosphoric acid production increased 23% after the Ennore unit resumed production. It also gained market share in the NPK category to 18%, primary sales rising 31% to 11 lakh tonnes. Specialty nutrients and organics witnessed double-digit growth, and the Nano DAP program kept gathering momentum for farmers.

Looking to the future, Coromandel is driving big-ticket projects. Its 70%-completed backward-integrated phosphoric and sulphuric acid plant is due for commissioning in Q4 FY26. A granulation expansion project of 7.5 lakh tonnes is planned for FY27, while the company is also expanding its holding in Senegal’s BMCC mine to meet rock phosphate supply needs. Growth into northern markets, drone spraying services, and launches of new products in crop protection further highlight its growth agenda.

#2 Chambal Fertilisers and Chemicals

Chambal Fertilisers & Chemicals, an Adventz group company, is engaged in production of Urea from its own manufacturing plants. It also markets/deals in other fertilisers and agri-inputs. It also has a Joint Venture for manufacture of Phospohric Acid in Morocco.

Chambal Fertilisers and Chemicals posted a consistent Q1 performance, with consolidated revenue at Rs 5,698 crore and PAT at Rs 549 crore, up 22.5% from year-ago levels. Operating profit margins were robust despite a brief shutdown at its Gadepan-II unit, which reduced urea production to 8.54 lakh tonnes from 9.03 lakh tonnes last year. Urea sales were at 8.41 lakh tonnes, and subsidy receivables were at Rs 1,326 crore.

The highlight was the 70% surge in phosphatic and complex fertiliser sales to 4.21 lakh tonnes on the strength of policy support and strategic sourcing. Crop protection and speciality nutrients also maintained their growth, with revenues at Rs 452 crore, up by 32% YoY, with the strength coming from the launch of 13 new products. The company also forayed into the seed business, adding maize and bajra to its family, and grew biological inputs with 80% of revenue growth.

Going forward, Chambal is spending big on capacity and diversification. Its Rs 1,645-crore Technical Ammonium Nitrate (TAN) project will be commissioned by early 2026 with Rs 918 crore having been already incurred. The IMACID JV is increasing phosphoric acid capacity from 5 lakh tonnes to 7 lakh tonnes, while Rajasthan incentives under the RIPS scheme will help sustain returns. Management has also indicated room for more partnerships in seeds, CPC, and complex fertilizers as the company diversifies beyond urea.

#3 Paradeep Phosphates

Incorporated in 1981, Paradeep Phosphates is a manufacturer of non-urea fertilizers and India’s second largest private sector phosphatic company. The company is engaged in manufacturing, trading, distribution, and sales of a variety of complex fertilisers.

Paradeep Phosphates posted a robust FY26 commencement with the support of good monsoons and prudent execution. Q1 revenue grew 58% year-on-year at Rs 3,754 crore, while EBITDA was Rs 493 crore and PAT at Rs 256 crore, almost doubling compared to last year.

Volumes were strong, with 6.6 lakh tonnes of finished fertilisers manufactured and primary sales rising 34% to 7.4 lakh tonnes. The flagship N-20 grade continued to gather pace at 2.24 lakh tonnes, and close to seven lakh bottles of biogenic nano fertilisers were retailed in the quarter.

Backward integration continued to firm up the model. Phosphoric acid production increased 22% to 1.13 lakh tonnes and sulphuric acid production grew 30% to 2.83 lakh tonnes, offering cost benefits in spite of fluctuating raw material prices.

Strategically, the business is increasing sulphuric acid capacity to 2 mtpa (million tonnes per annum) from 1.39 mtpa in Q3 FY26 and phosphoric acid capacity to 0.7 mtpa from 0.5 mtpa in two years. It also received approval from shareholders to merge with Mangalore Chemicals & Fertilisers, which is currently in its last NCLT stages and likely to increase scale and reach.

Management has projected maintaining EBITDA at about Rs 5,000 per tonne, underpinned by healthy demand for NPKs and consistent subsidy payments.

#4 Gujarat State and Fertilisers and Chemicals

Incorporated in 1962, Gujarat State Fertilisers & Chemicals is a public sector company promoted by the Government of Gujarat. It is engaged in manufacturing of various fertilizers and industrial products like plastics & synthetic rubbers and man-made fibres.

Gujarat State Fertilizers & Chemicals (GSFC) saw a consistent performance in the June 2025 quarter. Consolidated revenue was Rs 2,184 crore, operating profit Rs 193 crore and net profit Rs 139 crore. Margins were modest at 9%, but profitability was sequentially higher than last quarter.

The company, one of western India’s major fertiliser manufacturers, continues to expand its integrated portfolio in urea, complex fertilisers, and industrial chemicals. It has continued its dividend record, with a dividend of Rs 5 per equity share for FY25, reflecting confidence in its cash flows.

Strategically, GSFC is focusing on efficiency and sustainability with spending on energy-saving technologies, debottlenecking of fertiliser units, and diversification into high-value products to de-risk dependence on subsidy-linked revenues. Governance has also been in the spotlight, with new leadership with that is aiming for long-term growth.

With a large presence in both chemicals and fertilisers, GSFC is a diversified play. While near-term performance is sensitive to input cost volatility, the company’s capex pipeline and emphasis on value-added products are likely to offer resilience in the long term.

Valuations

Let’s now take a look at the valuations of these fertiliser companies, using the Enterprise Value to EBITDA metric.

Valuations of Top Fertiliser Companies (EV/EBITDA)

Sr No	Company	EV/EBITDA	ROCE	1 Year Share Price Return
1	Coromandel International	19.4	23.2%	35.9%
2	Chambal Fertilisers	7.7	26.8%	6.9%
3	Paradeep Phosphates	10.1	13.7%	98.8%
4	Gujarat State and Fertilisers and Chemicals (GSFC)	6.1	6.2%	-6.4%
	Industry Median	11.4	13.2%	NA

Source: Screener.in

The numbers indicate a large difference in valuations compared to the industry median of 11.4x. Some trade at large premiums due to investor faith in their product diversity and growth visibility, while others trail way behind the median because of higher reliance on subsidy-linked incomes and cyclical stress.

This divergence highlights how investors are valuing visibility of growth and stability on one hand, and while others are being valued as potential catch-up plays. The larger question for investors is whether premiums in some names still have room to run, or if the better trade is in those that are below the median. In the end, the best investments are where fundamentals and valuations converge to provide headroom for future appreciation.

The share price returns tell an equally mixed story. While one stock has delivered near-triple digit gains over the past year, another has slipped into negative territory despite its scale. This divergence reflects how markets reward efficiency and growth visibility while punishing subsidy-linked volatility and weak margins.

Together, these metrics suggest that the sector cannot be judged on valuations alone. Some companies command a premium on the back of strong capital efficiency and consistent growth, while others may appear cheaper but carry structural risks. For investors, the task lies in weighing these financial markers against long-term demand trends and policy dynamics before making allocation decisions.

Investment Takeaway

Even as fertiliser consumption is supported by monsoons and rural consumption, the industry remains far from risk-free. Profitability continues to depend upon timely subsidy releases, which tend to strain working capital and burden cash flows. Overdependence on imported raw materials such as phosphoric acid and ammonia exposes earnings to fluctuations in global prices, while policy measures — ranging from nutrient-based subsidy reforms to curbs on exports — have the potential to change the picture overnight.

Meanwhile, firms are making concerted attempts to cut this reliance. Phosphoric and sulphuric acid backward integration ventures, plant efficiency improvements, and investments in speciality nutrients and biologicals are being pursued to increase resilience. The gradual expansion of balanced fertilisation and value-added products such as Nano DAP also has the potential for stable margins.

The industry thus stands at a crossroads: no longer wholly subsidy-supported, yet not entirely isolated from structural vulnerabilities either. Investors need to make a holistic consideration prior to deploying capital, balancing the growth catalysts with the intrinsic volatility that still defines the fertiliser industry.

Disclaimer:

Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. 

The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. 

Ekta Sonecha Desai has a passion for writing and a deep interest in the equity markets. Combined with an analytical approach, she likes to dig deep into the world of companies, studying their performance, and uncovering insights that bring value to her readers.

Disclosure: The writer and her dependents do not hold the stocks discussed in this article. 

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