💰 Financial Performance

Revenue Growth by Segment

The company operates as a single segment (manufacture and sale of fertilizers). Revenue from operations for H1 FY26 reached INR 1,597.92 Cr, representing a 5.5% YoY growth compared to INR 1,513.92 Cr in H1 FY25. This recovery follows a significant 30.6% revenue decline in FY24 (INR 1,770.56 Cr vs INR 2,549.69 Cr in FY23) due to flood-related shutdowns.

Geographic Revenue Split

Not disclosed in available documents; however, the primary manufacturing facility is located in Tuticorin, Tamil Nadu, suggesting a strong regional focus in South India.

Profitability Margins

Net Profit Margin for H1 FY26 improved to 8.0% (INR 127.92 Cr profit on INR 1,597.92 Cr revenue) from 6.4% in H1 FY25. This margin expansion was driven by a 1073% increase in other income, primarily from insurance claims for loss of profits.

EBITDA Margin

Operating profit before working capital changes for H1 FY26 was INR 207.70 Cr, yielding a margin of 13.0%, up 22.3% YoY from INR 169.87 Cr in H1 FY25. Core profitability is stabilizing as operations normalize post-disaster.

Capital Expenditure

Capital expenditure on Property, Plant, and Equipment (PPE) surged 249% to INR 224.03 Cr in H1 FY26, compared to INR 64.16 Cr in H1 FY25, indicating significant reinvestment in manufacturing infrastructure.

Credit Rating & Borrowing

Finance costs decreased by 16.5% YoY to INR 18.75 Cr in H1 FY26. The company made a substantial net repayment of short-term borrowings amounting to INR 307.82 Cr, while securing new long-term borrowings of INR 133.78 Cr.

⚙️ Operational Drivers

Raw Materials

Nitrogenous chemical inputs for Urea production represent the primary cost, with cost of materials consumed totaling INR 1,121.86 Cr in H1 FY26, or 70.2% of total revenue.

Capacity Expansion

Not disclosed in available documents; however, the INR 224.03 Cr investment in PPE in H1 FY26 suggests ongoing capacity maintenance or enhancement at the Tuticorin facility.

Raw Material Costs

Raw material costs remained flat YoY at INR 1,121.86 Cr in H1 FY26 despite a 5.5% increase in revenue, indicating improved procurement efficiency or favorable pricing for nitrogenous inputs.

Manufacturing Efficiency

Operating profit before working capital changes grew 22.3% YoY in H1 FY26, outpacing revenue growth of 5.5%, which signals higher manufacturing efficiency and better cost absorption post-recovery.

📈 Strategic Growth

Expected Growth Rate

12%

Growth Strategy

Growth will be achieved through the full restoration of the Tuticorin Urea plant's capacity following flood damage, realization of pending insurance claims (INR 20.79 Cr), and leveraging the 39% profit growth from Joint Ventures and Associates (INR 22.76 Cr in H1 FY26).

Products & Services

Urea (Nitrogenous chemical fertilizer).

Brand Portfolio

SPIC.

Strategic Alliances

The company has significant JVs and associates that contributed INR 22.76 Cr to H1 FY26 profit, a 39% increase YoY, providing a diversified income stream beyond standalone Urea production.

🌍 External Factors

Industry Trends

The fertilizer industry is currently focused on operational resilience and recovery from supply chain shocks. SPIC is positioning itself through infrastructure reinvestment (INR 224 Cr Capex) to ensure future production stability.

Competitive Moat

SPIC maintains a regional moat in South India through its established Tuticorin facility and the 'SPIC' brand name, which are sustainable due to the high capital intensity and regulatory hurdles for new fertilizer plants.

Macro Economic Sensitivity

Highly sensitive to agricultural demand and monsoon patterns which dictate fertilizer consumption cycles.

Consumer Behavior

Demand is driven by farming cycles and government agricultural policies.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Companies Act 2013 and Ind AS. Fertilizer production is subject to strict environmental and safety norms, particularly for nitrogenous chemicals.

Taxation Policy Impact

The effective tax rate for H1 FY26 was approximately 33.8%, with current tax liabilities increasing 169% YoY to INR 60.22 Cr due to higher taxable profits.

Legal Contingencies

The company is currently managing an insurance claim process for flood damages totaling INR 85.06 Cr. While INR 55.18 Cr was received, INR 20.79 Cr remains under process and INR 9.09 Cr was rejected and charged to the P&L.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the potential for recurring natural disasters (floods) at the Tuticorin site and the timing of the remaining INR 20.79 Cr insurance settlement.

Geographic Concentration Risk

100% of manufacturing is concentrated at the Tuticorin facility, making the entire revenue stream vulnerable to local environmental risks.

Third Party Dependencies

High dependency on insurance providers for loss recovery and on JV partners for 11.8% of total PBT (INR 22.76 Cr of INR 193.16 Cr).

Credit & Counterparty Risk

Trade receivables adjustments of INR 7.65 Cr were noted in FY24; however, the 12-month operating cycle suggests standard credit terms for the fertilizer industry.