27-05-2025
Gujarat Narmada Valley Fertilizers & Chemicals Ltd (BOM:500670) Q4 2025 Earnings Call ...
Release Date: May 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
The board of directors has recommended a dividend of 180%, an increase from the previous 165%.
The company has a significant capital expenditure plan of around 2,900 crore at various stages of execution, aimed at improving efficiency and cost savings.
Sales volume growth was reported across several products, with notable increases in TGUa (52%), Aniline (15%), and Formic Acid (6.7%).
The chemical segment showed strong performance, contributing positively to the company's profitability.
The company is working on strategic initiatives to optimize procurement and power costs, which could lead to future cost savings.
The company experienced an elongated shutdown of the TDI 2 plant, resulting in a loss of approximately 300 crore in revenue and 100 crore in profits.
There was a net loss of roughly 100 crore in other comprehensive income due to a decline in the prices of listed investments.
The TDI production was down by 44% due to the extended shutdown, impacting overall production volumes.
Input cost advantages from reduced petrochemical prices were offset by pricing pressures on TDI output.
The company anticipates limited volume growth in FY 526 due to a planned three-week shutdown at the beginning of the financial year.
Warning! GuruFocus has detected 5 Warning Signs with BOM:500670.
Q: What was the sales volume growth for Gujarat Narmada Valley Fertilizers & Chemicals Ltd in FY 2025, and which products contributed to this growth? A: The sales volume was 7% higher than FY 2024. Specific product contributions included a 9% increase in sales, a 15% increase in aniline sales, a 52% increase in TGU sales, a 15% increase in CNS sales, and a 6.7% increase in formic acid sales. Methanol sales also increased by 7%.
Q: Are there any planned shutdowns for FY 2026, and which products are expected to see volume growth? A: A shutdown occurred at the beginning of the current financial year for about three weeks, limiting volume growth potential. No further shutdowns are planned for the rest of FY 2026.
Q: How did the extended shutdown of the TDI plant affect production and what are the expectations for FY 2026? A: The production was down by 31% due to the shutdown, with TDI volumes specifically down by 44%. For FY 2026, the company does not foresee major issues and expects to achieve installed capacity production.
Q: What is the impact of the reduction in toluene prices on the company's financials? A: While there has been a reduction in toluene prices, the benefit is offset by pricing pressure on TDI, which affects the input cost advantage.
Q: What are the expected benefits from the commissioning of the new boiler in FY 2026? A: The commissioning is expected by September 2025, with an anticipated cost advantage ranging between ?12,000 to ?18,000 per metric ton, depending on gas and coal prices. This could help reduce losses at the PBT level for TDI.
Q: Can you provide insights into the strategic initiatives for cost reduction and efficiency improvement? A: Initiatives include procurement optimization, power optimization through increased renewable energy use, and digital initiatives. These are expected to have varying timelines for impact, ranging from 6 months to 4 years.
Q: What are the production numbers for ammonia and weak nitric acid for FY 2026? A: Ammonia production from oil was 336,000 tons and from gas was 369,000 tons. Weak nitric acid production was approximately 443,000 tons.
Q: What is the status of the expansion plans recommended by Kearney, and what is the investment size? A: The company is considering an investment size of up to ?22,000 crore for new projects, which are mostly import substitutes. Detailed feasibility reports are being prepared to assess the return profile of each product.
Q: How does the company plan to manage maintenance CapEx and what is the expected CapEx for FY 2026? A: Maintenance CapEx is expected to be more than ?200 crore annually. The total CapEx for FY 2026 includes ?300 crore for ongoing projects, excluding maintenance CapEx.
Q: What is the outlook for methanol production given the current economic conditions? A: Methanol production was profitable for 7-8 months due to competitive gas prices. However, with rising gas prices since December, the plant is currently not in operation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
