Chambal Fertilisers & Chemicals Ltd held its Q2 FY27 earnings call on November 03, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.
Q2 FY 2026-2027 standalone revenue of Rs.7,000 crore — up 9% YoY from Rs.6,413 crore in Q2 FY 2025-2026; EBITDA of Rs.901 crore at a 12.87% margin; PAT of Rs.635 crore, up 6% YoY.
H1 FY 2026-2027 standalone revenue of Rs.12,027 crore — EBITDA up 9% to Rs.1,752 crore (margin up 133 bps); PAT up 8% to Rs.1,338 crore (margin up 89 bps).
Q2 FY 2026-2027 consolidated revenue of Rs.7,000 crore — EBITDA Rs.900 crore (12.87% margin); consolidated PAT Rs.632 crore (9.03% margin); consolidated H1 FY 2026-2027 PAT of Rs.1,156 crore.
Q2 EBITDA margin held at 12.1% despite higher input costs; management said the traded fertilizer segment absorbed price pressure while urea ran at full capacity with better efficiency.
Complex fertilizer volumes fell 30% YoY in Q2 FY 2026-2027 while input prices escalated; inventory charged to revenue was replaced at higher cost, yet margins were broadly maintained.
Management denied any inventory write-down in Q2 FY 2026-2027 — specifically in the NPK segment ("Absolutely not").
Urea Full-Capacity; Complex Fertilizers Under Pressure
Urea Q2 FY 2026-2027 production of 9.13 lakh MT and sales of 8.0 lakh MT; segment revenue Rs.4,629 crore, EBIT Rs.668 crore at a 14.44% margin.
Complex fertilizers Q2 FY 2026-2027 revenue of Rs.1,978 crore vs Rs.2,721 crore in Q2 FY 2025-2026; sales volume 3.04 lakh MT; EBIT Rs.78 crore at a 3.97% margin; new NPK grades planned (period unspecified).
Crop protection / specialty nutrients / seeds revenue of Rs.325 crore vs Rs.374 crore in Q2 FY 2025-2026; EBIT Rs.87 crore at a 26.76% margin; 13 of 14 planned FY27 products launched in H1 FY27, including new-age herbicide, fungicide and insecticide launches in Q2 FY 2026-2027.
DAP sales dialed down by almost 1.5 lakh tons in Q2 FY 2026-2027 — DAP is currently a fixed-margin business and was not attractive enough to trade at those volumes.
Amiset JV resumed production in Q2 FY 2026-2027 at lower capacity, influenced by sulfur availability and pricing; management continues to monitor the global sulfur market's impact on JV profitability.
Early TAN Economics Strong, But Entry Timing Poor
TAN project cost closed at Rs.1,500 crore — MD Abhay Baijal said the total was managed within guided numbers, though capitalization is not yet complete with some books still open (as of Q2 FY 2026-2027).
18% margins within ~40 days of production start (Q2 FY 2026-2027) — segment revenue Rs.67 crore, EBIT Rs.12 crore (17.97% margin); commercial production commenced in Q2 FY 2026-2027 with the HDAN plant.
First-40-days output of ~16,000 tonnes of weak nitric acid and ~9,500 tonnes of ANS and HDAN combined; ANS/HDAN running at 80-85% of capacity, with the balance ~15% to be ramped as demand grows and logistics improve (period unspecified).
Capacity utilization already crossed 83-84% (as of Q2 FY 2026-2027); raw materials are "more or less self-sufficient" per the MD.
Depreciation guidance of ~Rs.70 crore annually (~Rs.15 crore per quarter, excluding land) for FY 2027-2028 estimates; Q2 FY 2026-2027 depreciation rose from Rs.89 crore to ~Rs.100 crore YoY post TAN commissioning.
Low fixed-cost structure — no interest burden as the project was not borrowed for, so EBITDA more or less translates into PAT after depreciation; management expects better prices and improving margins over Q3–Q4 FY 2026-2027.
Market entry coincided with "the worst possible time" — low demand and competitive pricing pressure per the MD; no specific margin target given for coming quarters.
Gadepan 3 Benefit Expiry Looms; New Policy Normative
Gadepan 3 benefit expiry is imminent — the current policy expires by end of November 2026 (FY 2026-2027) and the new policy begins 1 December 2026 (FY 2026-2027); MD Abhay Baijal said there will "definitely" be an EBITDA impact, with the quantum to be known very soon.
Discussions with the government are ongoing — the matter is "doing the rounds" across various government departments; management has no visibility yet on the outcome.
Gadepan 3 baseline — stated capacity of 12.7 lakh metric tons, currently operating at $155/tonne (as of the Q2 FY 2026-2027 call), with the MD cautioning "there are expenses below that" level.
Analyst's Rs.700-1,000 crore EBITDA impact estimate not endorsed — the MD declined, saying he "can't really second guess" what the government is going to do; the range "can be as wide as" Rs.6,000-9,000/tonne (per the analyst's framing; period unspecified) and "depends ultimately on the government's own thinking."
New urea investment policy is normative, not project-specific cost-plus — the government itself believes "projects would earn within a viable 12-16% ROE band" (period unspecified) and will not cap returns ex post facto; returns above the band are possible if the company beats the government's efficiency, production, financing or tax assumptions.
FX mechanism for new projects — fixed charges of $133 or $151/tonne (as applicable; period unspecified) will be multiplied by the average dollar price over the first 4 years of project implementation; such projects take 3-5 years to complete.
Government's new urea plant policy is in the "final stages" per management's understanding, with announcement expected "very soon"; management's view is the government's priority "waterfall" will be brownfield projects first, then greenfield, with alternate technologies such as coal gasification also something the government is thinking of. Per the analyst's question (not confirmed by management), around 7-8 applications are with the government; management declined to speculate on acceptances.
Gas Spike Inflates Other Expenses; Subsidy Pile Builds
Gas cost rose from ~$20.2 in Q2 FY 2026-2027 to ~$24–$24.5 on NCV basis as of the call (Q3 FY 2026-2027), per CFO Anuj Jain.
Other expenses run rate moved to Rs.1,650 crore in Q2 FY 2026-2027 from a prior Rs.1,100-1,150 crore; MD Abhay Baijal attributed 85-90% of the increase to power and fuel, which the CFO quantified at Rs.500+ crore for Q2 FY 2026-2027.
Elevated run rate will not come down unless power and fuel costs normalize (period unspecified).
Subsidy receivables of Rs.4,157 crore at end-Q2 FY 2026-2027 — 2.1x the March 2026 (FY 2025-2026 close) level; H1 FY 2026-2027 subsidy receipts fell 9% YoY. Breakdown: urea gas escalation ~Rs.1,150 crore, stocks pending pause clearance ~Rs.1,000 crore, pending P&K costs ~Rs.500 crore, DAP advantage/disadvantage Rs.350-360 crore (typically settled ~6 months after season end).
Rs.1,300 crore of subsidy received in October 2026 (Q3 FY 2026-2027) — the MD said this indicates the government "is quite sensitive and has accepted that it has to work on the escalation factor for prices"; government payments had been received till the first/second week of September 2026 for urea and till August 2026 for P&K.
Subsidy trajectory conditional — if the government turns around the escalation file quickly enough, subsidy will be under control; but if plants run flat out and prices remain elevated at the $24 level that was talked about, there will definitely be a further increase in subsidy (period unspecified).
On a buyback suggestion from an investor, the MD said such calls are for the major shareholders to take and management does not give these kinds of suggestions to its major stakeholders.
Margins Near-Term Visible; Policy and Weather Wildcards
Q3 FY 2026-2027 margins expected to be more or less maintained with clear visibility; management declined to give an EBITDA margin guidance range for FY27/FY28, and the Q4 FY 2026-2027 outlook is left open, contingent on the geopolitical situation clearing. No FY 2027-2028 guidance provided.
Rabi margins expected "more or less similar" (not identical) in H2 FY 2026-2027; the company has strategically positioned itself for the Rabi season, and the Rabi NBS subsidy announcement is long overdue — management expects the government to release it in a matter of days, if not immediately (no subsidy figure disclosed).
El Niño delayed monsoon timelines by 15-20 days up to a month in FY 2026-2027, with all-India rainfall 12.7% below normal; parts of Karnataka, Maharashtra and Rajasthan were badly hit while Punjab, Haryana and UP saw steady operations. El Niño lengthened working capital cycles and slowed channel inventory clearance, but the company did not suffer materially in volumes in FY 2026-2027 Kharif.
E-token (geofenced retail allocation) is an evolving risk — the MD said farmers become largely agnostic to which retail counter they visit, so sales could suffer when a farmer lands at a counter the company has not supplied; no quantified volume impact provided. On per-hectare usage restriction chatter, the MD said the government "can definitely ration to some extent" urea/DAP but questioned whether that would have the right impact.
Ammonium nitrate demand expected to grow at roughly 6% (period unspecified) — India's current imports stand at ~4 lakh tons (FY 2026-2027) and are likely to go down with domestic capacity additions; incremental demand of ~2.5-3 lakh tons every 2-3 years; with demand increasing in Q3 and Q4 FY 2026-2027, management expects pricing to become stronger and margins to improve in these two quarters.
G3 plant production of 9+ lakh tons expected by end of November (Q3 FY 2026-2027) based on the current run rate.
Growth levers cited for FY 2026-2027 and beyond — TAN ramp-up, value-added businesses, and potential urea capacity expansion under the National Investment Policy for 2026 approved by the Government of India; Chambal is undertaking preparatory activities for a potential fourth urea plant, subject to government approvals, project economics, and board approval. Performance remains influenced by West Asia tensions keeping energy-linked inputs, raw materials and freight elevated.
Disclaimer: This earnings call summary is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.
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