NFL - Natl.Fertilizer

📊 NSE: NFL 🏢 Fertilizers 📅 Last Updated: 12/14/2025 10:20

💰 Financial Performance

Revenue Growth by Segment

Total operating income declined by 20.36% from INR 29,584.3 Cr in FY2023 to INR 23,560.3 Cr in FY2024. For 9MFY2025, operating income stood at INR 15,338.0 Cr. The urea segment, which has a 3.57 MMTPA capacity, remains the primary revenue driver, while the trading portfolio was impacted by high import prices and low subsidy rates.

Geographic Revenue Split

NFL holds a leading market position in Northern and Central India, with a marketing network of over 2,800 to 4,000 dealers across 20 states. Specific regional percentage splits are not disclosed, but operations are concentrated in Punjab (Nangal, Bhatinda), Haryana (Panipat), and Madhya Pradesh (Vijaipur).

Profitability Margins

Profitability has seen a sharp decline: PAT margin dropped from 1.5% in FY2023 to 0.3% in FY2024, and further to -0.1% in 9MFY2025. Standalone PAT fell 85.8% from INR 456.1 Cr in FY2023 to INR 64.7 Cr in FY2024, primarily due to urea segment losses from multiple shutdowns and higher energy consumption.

EBITDA Margin

OPBDIT margin moderated from 3.5% in FY2023 to 2.7% in FY2024 and 2.5% in 9MFY2025. Core profitability is constrained by the removal of the floor price of INR 2,300/MT on fixed costs and downward revisions in energy norms by the GoI.

Capital Expenditure

The company implemented energy-saving capex (Energy Saving Scheme - ESS) across its units to meet normative energy norms. While specific total INR Cr for future capex is not detailed, the 9MFY2024 performance was impacted by shutdowns specifically taken for these energy-saving upgrades.

Credit Rating & Borrowing

NFL maintains strong financial flexibility due to its 74.71% GoI ownership, allowing it to raise funds at competitive rates. However, debt protection metrics weakened as Total Debt/OPBDIT rose from 3.8x in FY2023 to 6.5x in FY2024, and interest coverage fell from 3.4x to 2.3x in the same period.

⚙️ Operational Drivers

Raw Materials

Natural Gas (via HVJ pipeline) and Naphtha (dual feedstock for Vijaipur-II) are the primary raw materials for urea production. Imported DAP and NPK fertilisers are the main components of the trading portfolio.

Import Sources

Raw materials are sourced domestically via the Hazira-Vijaipur-Jagdishpur (HVJ) gas transmission pipeline. DAP and other phosphatic fertilisers are imported, though specific countries of origin are not listed beyond references to global price volatility.

Key Suppliers

The HVJ pipeline is the primary source for gas; however, specific supplier company names like GAIL or ONGC are not explicitly confirmed in the provided text.

Capacity Expansion

Current urea production capacity is 3.57 MMTPA, representing a 16% domestic capacity share. The company also has a joint venture, Ramagundam Fertilisers and Chemicals Limited (RFCL), which has a 1.27 MMTPA urea plant that has recently stabilized operations.

Raw Material Costs

Raw material costs are heavily influenced by pooled gas prices and international import prices for DAP. In FY2024, high import prices combined with inadequate Nutrient Based Subsidy (NBS) rates led to losses in the trading segment.

Manufacturing Efficiency

Efficiency is measured by energy consumption per MT of urea. The company expects improved profitability from FY2025 as units consume energy below the GoI-mandated normative levels.

Logistics & Distribution

NFL utilizes a vast network of 2,800+ dealers and cooperative societies across 20 states to distribute its 'Kisan' brand products.

📈 Strategic Growth

Growth Strategy

Growth is targeted through the stabilization of the 1.27 MMTPA RFCL joint venture, expansion of the agrochemical portfolio in key markets like Punjab and Haryana, and improving urea margins by reducing energy consumption below normative levels through ESS capex.

Products & Services

Urea, NPK fertilisers, Industrial Chemicals (Nitric Acid, Ammonium Nitrate), and Agrochemicals.

Brand Portfolio

Kisan (implied by industry context, though the documents focus on the corporate name NFL).

New Products/Services

Expansion of the agrochemical portfolio is underway, though specific revenue contribution percentages for new launches are not provided.

Market Expansion

Focusing on deepening penetration in Northern and Central India, specifically targeting the agrochemical markets in Punjab and Haryana.

Market Share & Ranking

NFL is the second-largest producer of urea in India with approximately 16% of domestic capacity.

Strategic Alliances

Joint venture with Ramagundam Fertilisers and Chemicals Limited (RFCL) for a 1.27 MMTPA urea plant.

🌍 External Factors

Industry Trends

The industry is shifting toward stricter energy efficiency norms and Nutrient Based Subsidy (NBS) models. The GoI allocated INR 1.68 trillion for fertiliser subsidies in FY2026 to support the sector.

Competitive Landscape

Key competitors include IFFCO (the largest producer) and other private/public sector fertiliser manufacturers.

Competitive Moat

Moat is derived from its status as a Navratna PSU, 74.71% GoI ownership providing financial flexibility, and its strategic importance as the 2nd largest urea producer ensuring food security.

Macro Economic Sensitivity

Highly sensitive to agricultural output and monsoon performance, as a significant portion of Indian arable land lacks irrigation.

Consumer Behavior

Demand is driven by mandatory urea requirements for crops, which has low demand risk but is subject to weather-related volatility.

Geopolitical Risks

The industrial chemicals segment was previously adversely affected by Russian dumping, which pressured margins.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Department of Fertilisers (DoF). Key regulations include the New Urea Policy (energy norms), Nutrient Based Subsidy (NBS) for NPK, and GoI-set retail prices for urea.

Environmental Compliance

The company is investing in energy-saving capex to comply with tightening GoI energy consumption norms for urea production.

Taxation Policy Impact

Current tax for FY2024 was INR 19.30 Cr on a consolidated basis.

⚠️ Risk Analysis

Key Uncertainties

1) Timely release of subsidies by the GoI (budgeted at INR 1.68 trillion for FY2026). 2) Volatility in international gas and fertiliser prices. 3) Changes in GoI support philosophy or a stake sale below 50%.