GNFC - G N F C

📊 NSE: GNFC 🏢 Chemicals 📅 Last Updated: 12/13/2025 22:12

💰 Financial Performance

Revenue Growth by Segment

In H1 FY25-26, the Fertilizer segment revenue was INR 1,358 Cr, a 12% decrease from INR 1,537 Cr in H1 FY24-25. The Chemical segment revenue was INR 2,167 Cr, an 8% decrease from INR 2,351 Cr. Overall revenue for 9MFY25 marginally increased to INR 5,837 Cr compared to INR 5,820 Cr in 9MFY24.

Geographic Revenue Split

Not disclosed in available documents; however, manufacturing facilities are concentrated in Bharuch and Dahej, Gujarat, with a strong market presence across India.

Profitability Margins

The PAT margin declined from 19.54% in FY22 to 14.17% in FY23. Operating profit margin for 9MFY25 stood at 6.42%, a slight improvement from 6.15% in 9MFY24, driven by higher sales volumes despite subdued price realizations in industrial chemicals.

EBITDA Margin

EBITDA margin was 19.23% in FY23, a significant decline from 28.22% in FY22. This 9% drop was primarily due to lower realizations in the chemical segment and increased input costs.

Capital Expenditure

The company is undertaking a large-scale capital expenditure program with an estimated cost of ~INR 2,300 Cr. This includes modernization, backward integration, and product diversification projects such as the WNA-III plant and a coal-based steam and power plant, funded entirely through internal accruals.

Credit Rating & Borrowing

The company maintains a 'Stable' credit rating with a conservative capital structure. Interest coverage ratio stood at 425.81 times in FY23 but moderated to 60.83 times in FY24. Borrowings were significantly reduced by 92% to INR 8 Cr as of September 2025 from INR 99 Cr in March 2025.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Natural Gas (used for Urea and industrial products), Rock Phosphate, Denatured Ethyl Alcohol, Benzene, Toluene, Coal, and petroleum feedstocks like FOHV, LSHS-P, and HSFO.

Import Sources

Rock Phosphate and Denatured Ethyl Alcohol are imported to manufacture Ammonium Nitro Phosphate and Ethyl Acetate. Specific countries are not listed, but pricing is subject to international import parity and forex fluctuations.

Key Suppliers

IOCL (Indian Oil Corporation Ltd) meets the entire requirement for petroleum feedstock under a contract valid until April 30, 2029. Natural gas is sourced via monthly spot tenders or competitive bidding.

Capacity Expansion

Current projects include the WNA-III plant and a coal conveyor belt project. The company is also replacing a urea reactor to maintain its position as one of India's largest single-stream urea manufacturers.

Raw Material Costs

Raw material costs are subject to high volatility; however, for Urea, natural gas costs are a pass-through if consumption is within permissible norms. In H1 FY25-26, chemical segment results improved to INR 294 Cr from INR 233 Cr (a 26% increase) partly due to decreased input costs.

Manufacturing Efficiency

The company is focused on digital deployment-based savings and steam power operation improvements. A.T. Kearney's assignment aims to flow these savings into the P&L by the second half of the next fiscal year.

Logistics & Distribution

Not disclosed as a specific percentage of revenue, but the company utilizes a coal conveyor belt project to streamline raw material movement.

📈 Strategic Growth

Expected Growth Rate

Growth Strategy

Growth is targeted through a ~INR 2,300 Cr capex plan focusing on backward integration and product diversification. Cost optimization via A.T. Kearney is expected to add hundreds of crores to the bottom line. The company is also ramping up volumes in TDI, Aniline, and Formic Acid to offset subdued pricing.

Products & Services

Urea, Ammonium Nitro Phosphate (ANP), Calcium Ammonium Nitrate (CAN), Methanol, Acetic Acid, Aniline, Toluene Di-Isocyanate (TDI), Formic Acid, Nitric Acid, and Ethyl Acetate.

Brand Portfolio

GNFC (Gujarat Narmada Valley Fertilizers and Chemicals Ltd).

New Products/Services

The company is diversifying its product basket to include more industrial chemicals, though specific new product revenue contributions are not yet quantified.

Market Expansion

GNFC is leveraging its position as the sole/largest manufacturer of TDI in India to capture domestic demand and substitute imports.

Market Share & Ranking

GNFC is the sole/largest manufacturer of Toluene Di-Isocyanate (TDI) in India and one of the largest single-stream urea manufacturers.

Strategic Alliances

Promoted by the Government of Gujarat and Gujarat State Fertilizers and Chemicals Limited (GSFC), who cumulatively hold a 41.30% stake.

🌍 External Factors

Industry Trends

The Indian chemical industry is growing at 9%, outpacing GDP. GNFC is positioning itself to benefit from this by shifting its revenue mix toward chemicals, which contributed 63% of revenue and over 95% of EBIT in FY23.

Competitive Landscape

Fierce competition exists from dominant foreign suppliers as most GNFC chemical products are import substitutes.

Competitive Moat

GNFC's moat is built on being the sole/largest producer of TDI in India and its vertical integration. This cost leadership and market dominance in specific chemicals provide a durable competitive advantage.

Macro Economic Sensitivity

Highly sensitive to agro-climatic conditions (monsoon) which dictate fertilizer demand, and global commodity cycles affecting chemical realizations.

Consumer Behavior

Demand for fertilizers is driven by government subsidy policies and monsoon patterns, while industrial chemical demand follows domestic manufacturing growth.

Geopolitical Risks

Geo-political disturbances are cited as a primary reason for the difficulty in forecasting natural gas prices and supply stability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are heavily influenced by the Urea pricing formula (pass-through mechanism) and Nutrient Based Subsidy (NBS) rates for other fertilizers. Energy norms for fertilizers are prescribed by the government without capital subsidy support.

Environmental Compliance

The company received an ESG rating from ESG Risk Assessments & Insights Limited and maintains ISO certifications for its complexes.

Taxation Policy Impact

Taxes paid in H1 FY25-26 were INR 106 Cr compared to INR 110 Cr in H1 FY24-25.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the volatility of natural gas prices and the timely release of government subsidies. A delay in subsidy payments could impact liquidity, although current liquidity is strong at INR 1,054 Cr.

Geographic Concentration Risk

Manufacturing is concentrated in Gujarat (Bharuch and Dahej), making it sensitive to regional industrial policies and local environmental regulations.