KHAICHEM - Khaitan Chemical

📊 NSE: KHAICHEM 🏢 Fertilizers 📅 Last Updated: 12/14/2025 8:54

💰 Financial Performance

Revenue Growth by Segment

Total operational income grew 34.42% YoY from INR 5,358 Mn in FY24 to INR 7,202 Mn in FY25. For H1-FY26, the company recorded INR 5,429 Mn, which is approximately 75% of the total FY25 revenue in just six months, indicating a strong upward trajectory in fertilizer and chemical sales.

Geographic Revenue Split

Not explicitly disclosed by percentage, but operations are concentrated in Madhya Pradesh (Nimrani), Uttar Pradesh (Jhansi and Malwan), and Rajasthan (Dhinwa). The Nimrani plant is the largest hub with a 400,000 MT SSP capacity.

Profitability Margins

Net profit margins improved significantly from a loss of -13.16% in FY24 to a positive 0.19% in FY25, further surging to 7.90% in H1-FY26. This recovery is driven by better absorption of fixed costs as revenue scaled.

EBITDA Margin

EBITDA margin stood at 11.57% in H1-FY26, a substantial recovery from 3.19% in FY25 and a negative -5.65% in FY24. The 838 bps improvement from FY25 to H1-FY26 reflects enhanced operational efficiency and favorable pricing.

Capital Expenditure

Not disclosed in absolute INR Cr for future periods, but the company maintains significant infrastructure across four locations with a total SSP capacity exceeding 732,000 MT and Sulphuric Acid capacity of 214,000 MT.

Credit Rating & Borrowing

Finance costs were INR 298 Mn in FY25 and INR 162 Mn in H1-FY26. The Net Debt to Equity ratio improved from 1.4x in FY24 to 1.0x in H1-FY26, indicating a reduction in leverage relative to equity growth.

⚙️ Operational Drivers

Raw Materials

The primary raw materials for the company's fertilizer and chemical production include Rock Phosphate and Sulphur (used to produce Sulphuric Acid). Specific cost percentages for each were not disclosed in the provided documents.

Capacity Expansion

Current installed capacities include SSP: 732,000 MTPA (Nimrani 400k, Jhansi 132k, Dhinwa 200k); GSSP: 445,000 MTPA; Sulphuric Acid: 214,000 MTPA; and TG Power: 3.9 MW. No specific expansion timelines were provided.

Raw Material Costs

Total expenses were INR 6,972 Mn in FY25 (96.8% of revenue) and INR 4,801 Mn in H1-FY26 (88.4% of revenue). The reduction in expense-to-revenue ratio by 8.4 percentage points highlights improved procurement or higher realization prices.

Manufacturing Efficiency

Working capital days improved by 24.3%, dropping from 78 days in FY23 to 59 days in FY25, indicating faster inventory turnover and better collection cycles.

Logistics & Distribution

The company utilizes a distribution network across Madhya Pradesh, Uttar Pradesh, and Rajasthan to serve the agricultural sector, though specific costs as a % of revenue are not listed.

📈 Strategic Growth

Expected Growth Rate

50%

Growth Strategy

Growth is being achieved through increased capacity utilization and market penetration in the SSP and GSSP segments. The company is leveraging its multi-state manufacturing presence to capture regional demand and has seen a sharp recovery in EBITDA margins to 11.57% in H1-FY26.

Products & Services

Single Super Phosphate (SSP), Granulated Single Super Phosphate (GSSP), Sulphuric Acid, Oleum, Liquid SO3, and TG Power.

Brand Portfolio

Khaitan Chemicals and Fertilizers (KCFL).

Market Expansion

The company is strengthening its presence in Rajasthan and Uttar Pradesh, as evidenced by the operational capacities in Dhinwa and Jhansi.

🌍 External Factors

Industry Trends

The fertilizer industry is shifting toward granulated products (GSSP) for better soil absorption. KHAICHEM is positioned for this with 445,000 MT of GSSP capacity. The industry is currently seeing a recovery in margins after a volatile FY24.

Competitive Landscape

Competes with other SSP and Sulphuric Acid manufacturers in the North and Central Indian markets.

Competitive Moat

The company's moat is built on its integrated manufacturing (Sulphuric Acid used for SSP production) and captive power plants, which provide a cost advantage over non-integrated players. This is sustainable as long as captive power remains cheaper than grid power.

Macro Economic Sensitivity

Highly sensitive to agricultural GDP and monsoon patterns, as these dictate the demand for phosphate-based fertilizers.

Consumer Behavior

Farmers are increasingly preferring granulated fertilizers (GSSP) over powder forms for ease of application and reduced wastage.

Geopolitical Risks

Global supply chain disruptions for Rock Phosphate (often imported) could impact input costs and production stability.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Fertilizer (Control) Order 1985 and the Explosives Act 1884, which regulate the production, quality, and handling of chemical fertilizers.

Environmental Compliance

The company complies with the Environmental (Protection) Act 1986 and Water/Air Pollution Acts. It conducts regular mock drills and fire safety training (100% coverage) to maintain safety standards.

Taxation Policy Impact

The company recorded a tax credit of INR 179 Mn in FY25, which contributed to its return to profitability.

Legal Contingencies

The company faced a governance lapse regarding the appointment of an independent director over 75 years of age without a timely special resolution (Regulation 17(1A)). This was later rectified with a delay. No other material fines or pending court case values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

Volatility in raw material prices (Sulphur/Rock Phosphate) and changes in the Nutrient Based Subsidy (NBS) rates by the government pose significant risks to margins.