Fertilizer Stock in Focus After Reporting 54% YoY Increase in Net Profit

Synopsis:- A phosphatic fertiliser manufacturer’s June-quarter numbers show profit climbing faster than sales, extending a growth run that stretches back to early 2023, even as the company adjusts to a board-approved stock split and a widening finance cost bill.

Shares of a leading phosphatic fertiliser and industrial chemicals manufacturer came into focus after the company’s board, meeting on Monday, approved unaudited financial results for the quarter ended June 30, 2026. The numbers extend a streak of consecutive year-on-year revenue growth that has held since the March 2023 quarter, with profit after tax rising faster than sales for the period.

With a market capitalization of Rs. 4,306.29 crore, the shares of Krishana Phoschem Limited were trading at Rs. 138.75 per share, down around 1.03 percent from its previous closing price of Rs. 140.20. The stock is trading at a P/E of approximately 24.06 times trailing twelve-month earnings.

Q1 Update 

Revenue from operations increased 34.6 percent from Rs. 395.54 crore in Q1FY26 to Rs. 532.31 crore in Q1FY27, while profit after tax grew at a faster 54 percent from Rs. 30.58 crore to Rs. 47.09 crore. Earnings per share rose from Rs. 0.99 to Rs. 1.52 on a split-adjusted basis, reflecting stronger profitability, while total comprehensive income increased from Rs. 30.58 crore to Rs. 47.06 crore. Sequentially, revenue declined from Rs. 755.49 crore in Q4FY26, in line with the seasonal nature of the fertiliser business.

Margins Hold, But Costs Are Creeping Up 

Cost of materials consumed increased 40 percent from Rs. 242.18 crore in Q1FY26 to Rs. 339.06 crore in Q1FY27, with its share of revenue rising from 61.2 percent to 63.7 percent. Employee expenses grew 52 percent from Rs. 8.24 crore to Rs. 12.49 crore, while depreciation jumped 79 percent from Rs. 7.66 crore to Rs. 13.71 crore. 

Finance costs more than doubled from Rs. 9.46 crore to Rs. 20.80 crore, reflecting higher borrowings, while profit before tax increased 18.2 percent from Rs. 51.26 crore to Rs. 60.60 crore, trailing the pace of revenue and net profit growth.

Profit before exceptional items and tax grew a more modest 18.2 percent to Rs. 60.60 crore, a slower pace than either revenue or bottom-line growth, with the gap between operating profit growth and profit-after-tax growth explained largely by what happened below the operating line.

What Drove The Profit

The 54 percent jump in profit after tax outpaced the 18.2 percent rise in pre-tax profit by a wide margin, and the reason lies in the tax line. Total tax expense for the quarter fell to Rs. 13.50 crore from Rs. 20.68 crore in the year-ago quarter, even as pre-tax profit rose. 

That pulled the effective tax rate down to roughly 22.3 percent from 40.3 percent a year earlier, driven by a deferred tax credit tied to MAT credit entitlement. Investors reading the headline profit growth figure should note that a meaningful share of it came from this tax-line movement rather than from operating performance alone, which grew at a considerably slower clip.

Working Capital and Cash Flow Signals 

For the full year ended March 2026, operating cash flow came in at negative Rs. 191 crore even as profit after tax for the year rose to Rs. 180 crore, a gap worth flagging for anyone tracking the balance sheet rather than just the income statement. The cash conversion cycle stretched to 126 days in FY26 from 95 days the year before, while debtor days extended to 108 from 102, both pointing to working capital tying up more cash even as the topline scales. 

Growth at this pace, funded partly through borrowings that roughly doubled over FY26, is worth watching alongside the headline revenue and profit numbers, since it is this dynamic, and not weak demand, that is pushing finance costs higher each quarter.

Stock Split Adjustment

The board had earlier approved a 5-for-1 stock split, cutting the face value of equity shares from Rs. 10 to Rs. 2, with shareholder approval secured at the June 24 annual general meeting and a record date of July 3, 2026. In line with accounting standards, the company has restated basic and diluted earnings per share for the current and comparative periods to reflect the higher post-split share count, which is why the Rs. 1.52 and Rs. 0.99 EPS figures already build in the split rather than needing separate adjustment by investors.

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