The domestic sales volume of complex fertilizers, including Diammonium phosphate (DAP) and NPK (nitrogen, phosphorus, and potassium), is anticipated to witness a growth rate of 4-5% in fiscal 2025, supported by expectations of a normal monsoon and stable retail prices, according to a report by CRISIL. Despite a robust 7-8% growth in fiscal year 2024, the operating profitability of complex fertilizer manufacturers is projected to decline by 30-35% in the current fiscal year. The report highlights that lower volatility in raw material costs will facilitate a commensurate nutrient-based subsidy (NBS) by the government, aiming to improve the operating profitability of manufacturers to a normalized level of about US$ 48.28 – 54.32 (Rs. 4,000 -4,500) per tonne in the next fiscal year after a decline in the current fiscal.
The growth in the current fiscal is attributed to improved availability and record pre-buying by farmers in the first half, anticipating retail price hikes in the second half. While profitability is expected to experience a sharp cut in the current fiscal year, a rebound is anticipated in the next fiscal year, supported by expectations of adequate NBS rates and a normal monsoon. CRISIL emphasizes the positive medium-term growth outlook for complex fertilizers, considering the imperative role of balanced soil nutrition for enhanced productivity and yields, coupled with the availability of subsidised rates. The report underscores the typical dependency of profitability for complex fertilizer makers on raw material input prices, NBS rates, and retail sales prices, with expectations of a normalization in profitability to US$ 48.28 – 54.32 (Rs. 4,000 -4,500) per tonne in the next fiscal.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.