Paradeep Phosphates Q2 FY27 Earnings Call: Guides H2 EBITDA At Rs. 4,500-5,000/Tonne, Rs. 6,700 Cr Subsidy Overhang

Paradeep Phosphates Ltd held its Q2 FY27 earnings call on October 29, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Solid H1 Growth Despite Monsoon Drag

• Q2 FY 2026-2027 revenue of Rs.7,364 crore — with EBITDA of Rs.431 crore, PBT of Rs.164 crore and PAT of Rs.122 crore.
• H1 FY 2026-2027 turnover of Rs.13,488 crore, up 19% YoY vs H1 FY 2025-2026; H1 EBITDA of Rs.1,173 crore and EBITDA per tonne of Rs.5,866 vs Rs.5,719 in the corresponding period of FY 2025-2026.
• Volumes of 1 million tonne in Q2 and 2 million tonnes in H1 FY 2026-2027 — achieved despite subdued monsoon in the country.
• Q2 FY 2026-2027 EBITDA per tonne was approximately Rs.4,250 (actual) — below the H2 guidance level offered by management (see Forward View).
• ~Rs.60 crore inventory write-down in Q2 FY 2026-2027 — CFO Bijoy Biswal confirmed stock valued at lower of cost or net realizable value on a prudence basis because the NBS subsidy was not declared; he agreed the benefit will flow back into reported numbers once NBS is announced, most likely in H2 FY 2026-2027.
• Headwinds cited — global uncertainty in sulfur pricing and availability, the Rabi notification impact yet to be factored in, and the Middle East situation.

Rs.6,700 Cr Subsidy Overhang; Debt Reduction Guided by Q3

• Total fertilizer subsidy outstanding of Rs.6,700 crore at end-Q2 FY 2026-2027 — split approximately Rs.3,000 crore billed (government subsidy ~Rs.3,000 crore as of September 2026) and Rs.3,700 crore in the channel (Rajiv Nambiar).
• ~Rs.1,200 crore received from the government in October 2026 (Q3 FY 2026-2027) — with ~Rs.2,750 crore received during Q2 FY 2026-2027; management expects further good collections in November 2026 once the new NBS policy is notified.
• Q2 FY 2026-2027 trade receivables of Rs.7,485 crore — including the Rs.6,700 crore subsidy receivable; the full cycle from dealer-level sale to government subsidy receipt runs 60-70 days (30-60 days at dealer level plus 15-20 days for the government cycle), with subsidy typically received within 15-30 days of post-sale farmer consumption in a normal scenario.
• Debt expected to be "substantially reduced" by end of December (Q3 FY 2026-2027) — CFO Bijoy Biswal attributed elevated debt to subsidy receivables and deliberate Rabi inventory stocking; he is "quite hopeful" gross debt will come down to around, or possibly slightly above, the March 2026 level of approximately Rs.6,900 crore by end of FY 2026-2027 (March 2027).
• Sulfur price compensation notification NOT issued — pending final cabinet approval and not factored into reported Q2 FY 2026-2027 numbers; the Rabi NBS policy is also yet to be announced, with reported numbers based purely on Kharif NBS rates.

Tactical Shift Toward DAP; SSP Deprioritized

• Imported DAP primary sales of 1.7 lakh tons in H1 FY 2026-2027 — with ~1.69 lakh tons realized in Q2 FY 2026-2027 (Q1 FY 2026-2027 had no DAP trading); management indicated DAP sales will also occur in Q3 FY 2026-2027.
• Other Q2 FY 2026-2027 traded volumes — MOP ~76,000 tons, TSP close to 1 lakh tons, ammonium sulfate ~35,000 tons; H1 NPK traded volumes (predominantly ammonium sulfate) were 0.57 lakh metric tons, with the remainder expected to be sold during the Rabi season (H2 FY 2026-2027).
• SSP volumes were "bleak and minuscule" in Q2 FY 2026-2027 — viability cited as the issue; management stated it is not concentrating much on SSP.
• Policy structure driving a tactical shift toward DAP in FY 2026-2027 — NPK MRPs upwards of Rs.2,000+ versus DAP at Rs.1,350; the company is augmenting phosphatic supply via DAP and TSP (46% P) while maintaining its NPK presence.
• Imports favored over in-house DAP/NPK production in FY 2026-2027 — Harshdeep Singh cited an "unprecedented situation" on sulfur availability that pulled down actual production, plus viability concerns in some areas, as the two reasons; a decision he called good for viability.
• Channel (POS) stocks of ~9 lakh MT at end-Q2 FY 2026-2027 — DAP ~2 lakh MT, NPK ~3.5 lakh MT, TSP ~1 lakh MT, vs ~8 lakh MT total in Q2 FY 2025-2026, with the increase primarily in urea; own finished-goods inventory of ~1.5 lakh tons (incl. transit).
• Long-term strategy unchanged — management remains committed to balanced nutrition (NPK, NPS grades and micronutrients) despite the policy skew toward DAP; MOP market share has significantly increased in FY 2026-2027.

El Niño Drag of 10-15%; Rabi Window Critical

• CEO Rajiv Nambiar quantified the monsoon impact at 10-15% for FY 2026-2027 — H1 FY 2026-2027 sales are already down almost 10% (actual); management aims to make up the loss in H2 FY 2026-2027 through the Rabi season and is hopeful FY 2026-2027 sales come in "around the same".
• ~13% monsoon rainfall deficit (El Niño) impacted offtake in West and South India — especially Maharashtra and Karnataka; Odisha, Madhya Pradesh, UP, Bihar, Punjab, Haryana and Rajasthan are performing very well, these being the dominant Rabi markets with good traction for H2 FY 2026-2027.
• Industry-wide Rabi opening stocks elevated in FY 2026-2027 — per CCO Harshdeep Singh, DAP at ~2.3 million tonnes vs 1.9 million tonnes in FY 2025-2026 (+20%), and NPK at ~4.4 million tonnes vs 3.5 million tonnes (+29%); PPL stressed its own ~3.5 lakh tonnes NPK inventory is well balanced across DAP/NPK and geographies and is NOT higher than FY 2025-2026 levels, unlike the industry.
• Management does not expect any volume correction going forward into a normal year (FY 2027-2028) — attributing the FY 2026-2027 impact to policy (e-token) and monsoon deficit; phosphatic farmer-sales market share grew ~1% in FY 2026-2027 across operations in 18 states.
• E-token system a "new reality" — management said the shift toward farmer choice is inevitable; responses include farmer awareness creation, strengthening brand pull and market development; unbilled receivables are elevated because NPS stock is yet to be lifted, with billing to follow once NPS listing is up in October (Q3 FY 2026-2027).
• Risk flagged by analyst Riju Dalui (Antique Stock Broking) — a potential subsidy reduction in the next kharif season (FY 2027-2028), combined with high-cost inventory in the system, could trigger inventory losses and strain cash flows; management responded that the full Rabi consumption window lies ahead and it is confident of significantly reducing inventories, though "a little bit of residual risk will remain for everyone."

Rs.4,000-4,700 Cr Program Through 2029; Savings from Q1 FY28

• Rs.4,000-4,700 crore capex plan spread between FY 2026-2027 and 2029 — CEO Rajiv Nambiar said the major component is backward integration, already underway; he cited an expected EBITDA increase, referencing Rs.4,800-5,000 and an EBITDA level of around Rs.1,500 crore or more (figures as stated on the call; period unspecified).
• 5-7 lakh tonne backward integration project in full swing — construction ongoing and most material on site, with commissioning expected in Q1 FY 2027-2028 (management's reference: "Q1 of next year, '28").
• Expected savings of ~$150/ton once operational from Q1 FY 2027-2028 onwards — management cautioned the figure depends on the prevailing raw material situation.
• 1 MMT Paradeep capacity expansion in two phases — Phase 1 (0.5 MMT to 0.7 MMT) expected to be commissioned in Q1 FY 2027-2028; Phase 2 is awaiting environmental clearance, with engineering selection almost final and commercials ongoing — timeline indicated at second half FY29 into FY30 (management confirmed the analyst's framing).
• Phosphoric acid expansion at Paradeep from 5 lakh tonnes to 7 lakh tonnes on track (period unspecified) — public hearing for environmental approval of the enhanced capex program completed, with environmental approvals from the Ministry of Environment and Forest expected shortly; energy efficiency project at Goa completed.
• Recently signed MOU not directly tied to subsidized fertilizer — management is evaluating technology options beyond the subsidy regime, including gypsum valorization, non-subsidized products, liquid fertilizers and biofertilizers, with details to be shared after board sanction.

H2 EBITDA Guidance of Rs.4,500-5,000/T; Raw Materials Softening

• Management guided EBITDA of Rs.4,500-5,000 per tonne for H2 FY 2026-2027 — while noting it typically does not provide such per-ton guidance but offered it here as guidance.
• No forward-looking volume guidance for FY 2026-2027 — asked whether FY 2026-2027 sales could surpass FY 2025-2026's ~4.2 million MT, Harshdeep Singh said the company is not giving forward-looking guidance; H1 volumes of ~2 million MT reflect a ~1 million MT per-quarter run rate it is maintaining, with confidence expressed on Q3 FY 2026-2027 volumes.
• No guidance for FY 2027-2028 — CFO Bijoy Biswal said the company typically does not give guidance for FY 2027-2028; the focus is on retaining market share and driving profitable growth rather than volume alone, with the most optimal strategy to be decided in Q4 FY 2026-2027.
• Q4 FY 2026-2027 focus on profit optimization, not volume alone — clarity on final Q4 numbers will come once the NBS is announced and raw material prices are assessed; the company is maintaining phosphate market leadership.
• Raw material costs softening — phosphoric acid price rolled over at 1,700 into Q3 FY 2026-2027; ammonia prices have softened; international sulfur prices have corrected by more than $200/ton in the recent period; sulfur currently at around 850-880 (unit not specified), with management expecting further softening over the coming month (Q3 FY 2026-2027). On normalization after FY27, Biswal said "we hope so," adding "the worst looks to be over."
• NBS revision expected on the positive side — management expects a positive impact on the inventory PPL currently holds (expectation, not a commitment; timing not specified); the Rabi subsidy notification, typically declared by end-September/October, had not been announced as of the call, with declaration expected within a couple of days (Q3 FY 2026-2027).
• Supply context — DAP supply to India comes primarily from Saudi Arabia and Morocco, with additional phosphate volumes from the US; China has been muted on phosphates; sulfur and ammonia are sourced mainly from the Middle East, with no major capacity additions seen in the short term, though expansions may occur in Morocco for phosphates (industry context).