💰 Financial Performance

Revenue Growth by Segment

Total revenue grew at a 12% CAGR from FY21 (INR 2,144 Cr) to FY25 (INR 3,332 Cr). In FY25, Manufacturing revenue contributed INR 1,926 Cr (57.8% of total) while Trading revenue contributed INR 1,406 Cr (42.2% of total). Q1 FY26 revenue reached INR 862 Cr, a 6% YoY increase from INR 814 Cr in Q1 FY25.

Geographic Revenue Split

The company has a strong presence in Southern India, with approximately 72% of its products sold in Southern states, leveraging its established position and wide customer base in that region.

Profitability Margins

Operating Margin Ratio stood at 8.48% in FY25, a slight decrease from 9.09% in FY24. Net Profit Ratio improved to 4.31% in FY25 from 4.08% in FY24. PAT grew at a 21% CAGR from FY21 (INR 57 Cr) to FY25 (INR 144 Cr). Q1 FY26 PAT was INR 62 Cr, up 41% YoY from INR 44 Cr.

EBITDA Margin

EBITDA grew at an 11% CAGR from FY21 (INR 233 Cr) to FY25 (INR 359 Cr). Q1 FY26 EBITDA was INR 118 Cr, a 6% increase YoY from INR 112 Cr, reflecting stable operational performance despite raw material price fluctuations.

Capital Expenditure

The company successfully commissioned an ammonia energy improvement project in FY23. Planned future capex includes sulphuric acid and DAP capacity expansion projects over the next 2-3 years, aimed at maintaining net debt to EBITDA below 3.5x.

Credit Rating & Borrowing

The company holds a CARE BBB+; Stable rating for long-term facilities and CARE A3+ for short-term facilities. Interest coverage ratio improved 10.83% to 3.95x in FY25 from 3.57x in FY24 due to better profitability and debt management.

⚙️ Operational Drivers

Raw Materials

Key raw materials include Natural Gas (converted from Naphtha in FY21), Phosphoric Acid, and Ammonia. Raw material prices significantly impact the PBILDT margin, which moderated to 9.25% in H1FY22 from 12.25% in H1FY21 due to price hikes.

Import Sources

Raw materials like Phosphoric Acid are sourced globally, with procurement centralized at the Adventz group level to leverage economies of scale and cost efficiencies.

Key Suppliers

GAIL provides natural gas via the Kochi-Mangalore pipeline. Other raw materials are procured through group-level arrangements under the Adventz/Zuari umbrella.

Capacity Expansion

Urea production for Q1 FY26 was 1.22 lakh metric tons (LMT). The company plans to expand DAP capacity and establish a sulphuric acid plant to diversify its manufacturing base.

Raw Material Costs

Raw material costs are a major component of the cost of sales. The company transitioned from Naphtha to Natural Gas in FY21, which improved energy efficiency and allowable consumption norms under government regulations.

Manufacturing Efficiency

Manufacturing efficiency is tracked through energy consumption norms. The conversion to natural gas and the EIP project have optimized the production of Urea and Complex fertilizers.

Logistics & Distribution

The company focuses on the Southern Indian market (72% of sales) to minimize distribution costs and maintain a competitive edge in its core geography.

📈 Strategic Growth

Expected Growth Rate

12%

Growth Strategy

Growth will be driven by the strategic merger with Paradeep Phosphates Limited (PPL), which is in the concluding phase at NCLT. Additionally, the company is expanding manufacturing capacity in DAP and Sulphuric Acid and focusing on high-margin complex fertilizers.

Products & Services

The company sells Urea, Di-Ammonium Phosphate (DAP), Complex Fertilizers (N20), and other P&K fertilizers to the agricultural sector.

Brand Portfolio

Mangala (implied by the company name Mangalore Chemicals & Fertilizers Limited).

New Products/Services

Expansion into Sulphuric Acid manufacturing is expected to provide backward integration benefits and improve margins for the DAP segment.

Market Expansion

The company is leveraging the Adventz group's reach to deepen its market penetration in Southern India and potentially expand into adjacent territories post-merger with PPL.

Market Share & Ranking

MCFL is one of the leading fertilizer companies in Southern India, particularly in the states of Karnataka and Kerala.

Strategic Alliances

The company is part of the Adventz Group (Zuari group holds 54.03% stake) and is currently merging with Paradeep Phosphates Limited (PPL).

🌍 External Factors

Industry Trends

The industry is shifting toward higher energy efficiency and natural gas feedstock. The government is also tightening margin caps (8-10%) to control fertilizer prices, forcing companies to focus on operational cost control.

Competitive Landscape

Competes with other major fertilizer players in South India; the merger with PPL is intended to strengthen its competitive position through scale.

Competitive Moat

Moat is based on a strong distribution network in Southern India (72% sales) and integration with the Adventz group for procurement. However, the moat is regulated by government subsidy policies.

Macro Economic Sensitivity

Highly sensitive to monsoon patterns and agricultural demand in Southern India, as well as global commodity prices for gas and phosphoric acid.

Consumer Behavior

Demand is driven by seasonal farming cycles and the availability of government subsidies which keep retail prices affordable for farmers.

Geopolitical Risks

Vulnerable to global supply chain disruptions for raw materials like phosphoric acid and ammonia, which are often imported.

⚖️ Regulatory & Governance

Industry Regulations

Strictly regulated by the Department of Fertilizers. Margin caps of 10% on manufactured complex fertilizers and 8% on imported ones were issued on January 18, 2024.

Environmental Compliance

The company has invested in Energy Improvement Projects to comply with tightening environmental and energy efficiency norms for urea manufacturing.

Taxation Policy Impact

The company's PBT to PAT conversion suggests an effective tax rate of approximately 25-30% (FY25 PBT INR 206 Cr vs PAT INR 144 Cr).

Legal Contingencies

The company is currently undergoing a legal process at the NCLT for its merger with Paradeep Phosphates Limited, which has already received shareholder and creditor approvals.

⚠️ Risk Analysis

Key Uncertainties

Subsidy receivable delays are the primary risk, as they directly impact working capital and interest costs. Margin caps also limit the ability to benefit from favorable market pricing.

Geographic Concentration Risk

High geographic concentration with 72% of sales coming from Southern India, making the company vulnerable to regional weather patterns.

Third Party Dependencies

High dependency on the Government of India for timely subsidy releases and GAIL for continuous natural gas supply.

Technology Obsolescence Risk

The company mitigated technology risk by converting from Naphtha to Natural Gas and implementing energy improvement projects to meet modern efficiency standards.

Credit & Counterparty Risk

Subsidy debtors stood at INR 292 Cr as of June 30, 2025. While the counterparty (Government) is low-risk for default, the timing of payments is a significant liquidity risk.