Gujarat State Fertilizers & Chemicals shares sank almost nine percent in trade on May 22, after the state-run firm posted a 91 percent fall in net profit for the fourth quarter.
GSFC reported a net profit of Rs 21 crore for the three months ended March, down 91.25 percent on-year from Rs 240 crore in the corresponding period last year.
The firm's total revenue fell 18.2 percent on-year to Rs 1,992 crore, down from Rs 2,437 crore in the March quarter in the previous year.
At 2.30 pm, Gujarat State Fertilizers & Chemicals' stock price was down eight percent at Rs 221.9 per share on the NSE.
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In a filing with the exchanges, the company said, "Financial year 2023-24 was a challenging year for the company, due to external headwinds in both fertilizers and industrial products segments. The company registered an EBIDTA de-growth of 51 percent on-year."
While raw materials prices softened YoY, it was exceeded by the decrease in subsidy rates, thus squeezing fertilizers EBIT margins from 17 percent to five percent.
The fertilizer segment's topline and bottom-line were dampened by steep downwards revision in subsidy rates. Fertilizer sales decreased in value terms despite an increase of six percent in volume terms.
The guidance from the company's management also dampened its prospects. While India will receive above normal rainfall, which will brighten prospects for the fertiliser industry, but the Nutrient Based Subsidy (NBS) rates for Kharif crops announced in March 2024 are broadly non-remunerative for the industry.
"At current MRP & NBS subsidy, baring few NPK grades, imports as well manufacturing of DAP & NPK fertilizers is broadly non-viable," said the firm, adding, "The company plans to follow production with mix of DAP & Non- DAP products during Q1-24/25 so as to optimize the cost and targets sales of about 4.5 LMT during current quarter."
GSFC's share price gained 32 percent over the past year, as compared to a 23 percent rise in the frontline index Nifty 50.
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