Sales at Deepak Fertilisers and Petrochemicals Corp. Ltd fell in the March quarter, but keeping costs on a tight leash helped it post a higher net profit than in the year-ago period. While net sales declined from Rs359.5 crore to Rs342.3 crore, net profits rose from Rs31.3 crore to Rs39.6 crore. Profits in the March quarter increased by 6.6% year-on-year.
The markets cheered the result, with the stock moving up almost 8% in a very weak market on Wednesday.
The firm’s performance was better than in the December quarter, when net profits declined 8.5% y-o-y due to high raw material costs leading to lower operating margins. Though interest expenses have increased y-o-y, they are lower than in the December quarter.
In the chemicals business, revenues as well as profits were lower than in the year-ago period. But in the fertilizer segment, trading of speciality fertilizers contributed to higher profits.
Profits were also bolstered by the company’s realty business, which moved into positive territory from a loss in the previous quarter. The management says the company’s mall Ishanya has registered at least 1.3 million footfalls and seen conversion rates of up to 35%, among the highest in the mall industry.
As for future plans, Deepak Fertilisers’ ammonia storage tank at Jawaharlal Nehru Port is now ready, which will give the company a make-or-buy option for ammonia. This will give the company greater flexibility in its operations. Additional nitric acid facilities are also expected to be commissioned next month.
With volumes picking up and prices stabilizing, the current quarter should be better for it, especially with the management saying that the question of gas availability should be behind it soon.
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